The Final Countdown: California Public Employees’ Retirement System v. ANZ Securities and the Sweeping Ban on Tolling Statutes of Repose in Class Actions

Emily Kelsay

In September 2008, Lehman Brothers Holdings (“Lehman Brothers”) declared bankruptcy in a move that “reshape[d] the landscape of American finance.” In the last year of its life, Lehman Brothers used public securities offerings in an attempt to raise capital and increase its liquidity. Securities and Exchange Commission (“SEC”) requires that a company making a public security offering register the security and disclose important financial information. The registration statements must include: “[a] description of the company’s properties and business; [a] description of the security to be offered for sale; [i]nformation about the management of the company; and [a] [f]inancial statement certified by independent accountants.”

When Lehman Brothers made its public offerings in 2007 and 2008, its registration statements—prepared by underwriters6 from a variety of financial firms—contained allegedly falsified information regarding its accounting practices and risk management procedures. Under Section 11 of the Securities Act of 1933 (“Section 11”), plaintiffs can bring an action against underwriters of a security registration statement if the statement contains a misstatement or omission of a material fact. Claims made under Section 11 are subject, however, to the limitations of action provision codified in Section 13 of the Securities Act of 1933 (“Section 13”), which requires that a plaintiff bring the action within one year of discovering the falsity or within three years of the security’s public offering.