US INVESTORS who fear they were sold dodgy mortgage-backed derivatives by banks could miss out on the chance to sue because of the statute of limitations, lawyers warned yesterday.
“The suit against JP Morgan has been brought by the New York state attorney general, but many investors have sued banks in their own right,” said one who is close to the procedures.
“But the statute of limitation has started kicking in at the six-year mark in New York – so anyone who thinks they were defrauded in August 2006 has left it too late to start a suit.”
And the chairman of the government’s probe into the problem warned that time is even tighter for criminal cases, with a five-year limit on cases.
“I suggested to the congress in March that the statute of limitations was extended, as happened in the wake of the savings and loans crisis two decades ago, to allow a thorough investigation,” Phil Angelides from the Financial Crisis Inquiry Commission told the BBC.
JP Morgan did not sell the securities itself, but it bought Bear Stearns in 2008 and is fighting a civil fraud suit brought against that failed bank.
If the bank loses the case, it can expect to pay out billions of dollars to regulators and Bear’s customers.