Commercial Division Blog

Posted: February 4, 2021 / Categories Commercial, Securities

Sections 11 and 12 Claim Accrual Not Based on When Damages from Drop in Stock Price Occurred

On February 2, 2021, the First Department issued a decision in Matter of Dentsply Sirona, Inc., 2021 NY Slip Op. 00522, holding that Section 11 and 12 claim accrual was not based on when the plaintiffs were injured by the drop in stock price, explaining:

Plaintiffs' claims should have been dismissed as time-barred. Plaintiffs do not dispute that they could have discovered the alleged misrepresentations and omissions before June 7, 2017 (one year before the first complaint in this action); instead, they contend that they could not have brought claims under sections 11 and 12(a)(2) of the Securities Act of 1933 until August 2017, when the stock price of defendant Dentsply Sirona, Inc. declined precipitously. This argument is unavailing.

Section 12(a)(2) does not require damages. Rather, it permits rescission, and rescission is the relief sought by the named plaintiffs in this case.

As for section 11, a plaintiff need not plead damages under that section. Plaintiffs rely on Yi Xiang v Inovalon Holdings, Inc. However, to the extent that Yi Xiang conflicts with NECA, we follow NECA as the controlling authority.

Defendants submitted documentary evidence that the price of Dentsply Sirona stock was less than the offering price on numerous occasions before June 7, 2017. Hence, plaintiffs could have satisfied the court that they had suffered a cognizable injury and filed a timely lawsuit.

(Internal quotations and citations omitted).

We have substantial experience in litigation regarding securities, both in state and federal court. Contact Schlam Stone & Dolan partner John Lundin at if you or a client need help regarding a claim related to stocks, bonds or other financial instruments.