Second Circuit Affirms Rule 11 Sanctions Award Pursuant to PSLRA

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The U.S. District Court for the Second Circuit held that where a plaintiff and his counsel knowingly commenced a securities action in which the only purchase of an actual security occurred 18 years earlier, and failed to disclose that fact in the complaint, Rule 11 sanctions were warranted because the claim was clearly time-barred by the applicable statute of limitations.

Plaintiff John Libaire, Jr. and his attorney alleged in their complaint that, in addition to plaintiff’s purchase of a single share of common stock 18 years earlier, Mr. Libaire’s 2005 payment of annual dues to defendant North Fork Preserve, Inc. also constituted the purchase of a security. According to plaintiff, this later “purchase” established that his securities fraud claims were not time-barred.

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