Short-swing profits rule — Supreme Court protects corporate insiders

Description

Abstract: This article discusses a recent U.S. Supreme Court decision rejecting the Ninth Circuit’s 30-year-old rule allowing shareholders to file claims for recovery of short-swing profits years after the fact. In a case alleging insider collusion to drive up a post-IPO stock price, a district court dismissed the plaintiff’s complaints, citing the two-year statute of limitations. The Ninth Circuit reversed, asserting that the two-year-period was tolled (suspended). But the Supreme Court disagreed, sending the case back to the lower courts to apply standard equitable tolling principles.