Slayton v. American Express Co.
United States Court of Appeals for the Second Circuit
460 F.3d 215 (2006)
- Written by Salina Kennedy, JD
Facts
Andrew and Adam Slayton (the Slaytons) (plaintiffs) filed a class-action lawsuit against American Express Co. (Amex) (defendant), alleging securities fraud arising from a $182 million devaluation of Amex’s high-yield portfolio. After the devaluation, Amex assured its investors that it expected future losses in the high-yield portfolio to be much lower. In the Slaytons’ initial complaint, they made two allegations pursuant to which issues were raised on appeal. First, the Slaytons claimed that Amex failed to disclose to investors that its decision makers did not fully understand the complicated risks associated with some of its high-yield investments. Second, the Slaytons claimed that, after the devaluation, Amex failed to disclose the full extent of its exposure in its high-yield investments and instead continued to misunderstand the risks involved along with concealing the continuing losses sustained after the devaluation. The Slaytons later amended their complaint to include two additional allegations: first, that Amex failed to disclose its lack of risk-management controls and second, that Amex failed to disclose that it did not use proper valuation methods, nor did it comply with generally accepted accounting practices. The amended complaint was filed after the statute of limitations had run, and the trial court ruled that the new allegations did not relate back to the original complaint and were therefore time-barred. The Slaytons appealed to the United States Court of Appeals for the Second Circuit.
Rule of Law
Issue
Holding and Reasoning (Winter, J.)
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