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Series 79 practice questioneasySection 11 and Section 12 Liability

What is the statute of limitations for claims under Section 11 of the Securities Act?

  1. AOne year from the discovery of the misstatement, but no more than three years from the offering date✓ Correct answer
  2. BTwo years from discovery, with no outer limit
  3. CFive years from the offering date
  4. DSix months from the discovery of the misstatement
Explanation

Why A — One year from the discovery of the misstatement, but no more than three years from the offering date

Section 13 of the Securities Act establishes a one-year statute of limitations for Section 11 claims, beginning from the date the plaintiff discovered or should have discovered the misstatement or omission. However, there is an absolute three-year statute of repose from the date the security was bona fide offered to the public. This means that even if the misstatement is not discovered until four years after the offering, the claim would be time-barred. These time limitations encourage investors to be vigilant and discourage stale claims.

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