Third Circuit Affirms Dismissal of “Enron” Claims Against Mutual Fund Based On Inquiry Notice to Investors.
In Benak v. Alliance Capital Management, the Third Circuit Court of Appeals recently concluded that mutual fund investors had been put on inquiry notice by the media attention surrounding the Enron bankruptcy and that their claims against the mutual fund were therefore barred by the one year statute of limitations.
The Court held that the statute started running on the claims, which pertained to the Mutual Fund’s position in Enron, as soon as the media coverage of Enron’s bankruptcy began. The Court conceded that a mutual fund investor has "less reason to monitor the health of companies in which he or she is invested," and is "less likely to have accurate, contemporaneous information regarding where his or her money is invested." However, based on the level of publicity surrounding Enron, and based on the fact that some media reports specifically mentioned the mutual fund’s holdings in Enron, the Court reasoned that the investors were on inquiry notice and dismissed their claims as untimely.
Read more here.