Court Opinion

ID: 2963946
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:17:51.19327+00
Date Added: 2024-06-11T11:42:48.941738
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

          No. 95-1699

                     J. GEILS BAND EMPLOYEE BENEFIT PLAN, ET AL.,

                               Plaintiffs - Appellants,

                                          v.

                         SMITH BARNEY SHEARSON, INC., ET AL.,

                               Defendants - Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Robert E. Keeton, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________

                            Bownes, Senior Circuit Judge,
                                    ____________________

                              and Stahl, Circuit Judge.
                                         _____________

                                _____________________

               Thomas J. Butters, with  whom Cullen & Butters was  on brief
               _________________             ________________
          for appellants.
               Barry Y. Weiner, with  whom Christopher P. Litterio, William
               _______________             _______________________  _______
          E. Ryckman and  Shapiro, Israel & Weiner, P.C. were  on brief for
          __________      ______________________________
          appellees.

                                 ____________________

                                  February 20, 1996
                                 ____________________

                    TORRUELLA, Chief Judge.   Appellants, the J. Geils Band
                    TORRUELLA, Chief Judge
                               ___________

          Employee  Benefit  Plan  (the  "Plan"), and  Stephen  Bladd  (the

          "Trustee"),  John Geils,  Jr., Richard  Salwitz and  Seth Justman

          (the "Participants"), brought this suit alleging fraud and breach

          of fiduciary duty under the Employment Retirement Income Security

          Act  of 1974  ("ERISA"),  29 U.S.C.     1001 et  seq. (1994),  in
                                                       ________

          connection with certain investment transactions made by Appellees

          in 1985,  1986 and 1987.   The district court granted  the motion

          for summary judgment brought  by Appellees, Smith Barney Shearson

          ("Shearson"),  Matthew  McHugh, and  Kathleen  Hegenbart,  on the

          grounds  that Appellants'  claims are  time barred  under ERISA's

          six-year  statute of limitations.  For  the following reasons, we

          affirm. 

                          FACTUAL AND PROCEDURAL BACKGROUND
                          FACTUAL AND PROCEDURAL BACKGROUND
                          _________________________________

                    The following  facts are  summarized in the  light most

          favorable  to Appellants,  the party  opposing summary  judgment.

          Barbour  v. Dynamics  Research Corp.,  63 F.3d  32, 36  (1st Cir.
          _______     ________________________

          1995).

                    The Plan, also known as T & A Research and Development,

          Inc., was formed  as a pension  and profit sharing  plan for  the

          employees of the  J. Geils Band and, as a  common plan and trust,

          it is subject  to ERISA.  In  April of 1985, Bladd  as the Plan's

          Trustee1  opened  accounts  for  the Plan  with  Shearson  Lehman

          Brothers, Inc., a registered  broker-dealer and a member firm  of

                              
          ____________________

          1   The record shows that prior to serving as the Plan's trustee,
          Bladd had no significant financial background or experience. 

                                         -2-

          both the  National Association  of Securities Dealers  (NASD) and

          the  New  York Stock  Exchange (NYSE).    This appeal  stems from

          Shearson's management between 1985 and 1990 of the Plan's account

          and, specifically,  its  purchase of  three limited  partnerships

          (the first  in June of 1985, the second in September of 1985, and

          the third  in June of 1987) and execution of a "bond swap" in May

          of 1986.

                    The  Plan's  accounts  were  handled  by  Hegenbart,  a

          Shearson  employee who acted as the Plan's stock broker from 1985

          until Appellants transferred the  accounts from Shearson in 1990.

          McHugh,  a  Shearson  branch  manager,  supervised the  accounts.

          Hegenbart would make a recommendation, and if Appellants accepted

          it and executed an order, she would receive a commission.  If the

          recommendation  was  not  accepted,  she would  not  receive  any

          compensation from  Appellants.  While Appellants  communicated to

          Hegenbart that  they knew very little  about financial management

          or investment, Appellants retained decision-making authority over

          the  Plan accounts.   At  no time  was  Hegenbart given  power of

          attorney or discretionary authority over the accounts.

                    Upon  opening the  Plan's accounts, Hegenbart  sold the

          securities  transferred to  it and  one month  later, in  June of

          1986,  purchased over  $500,000  of long-term  zero coupon  bonds

          ("CATS"),  Shearson-managed  mutual  funds,  and  certificates of

          deposit.  In May  of 1986, Appellants swapped the  CATS purchased

          in 1985 for  other bonds  upon Hegenbart's  recommendation.   The

          bond swap resulted in  an overall loss to the  Plan and generated

                                         -3-

          over  $90,000 worth  of  commissions  --  $32,000 for  the  bonds

          purchased in  1985 and $61,000 for their sale in May of 1986, and

          the subsequent purchase of the  new bonds.  The Plan was  charged

          commissions of about 3.5%  for the sale of the  CATS purchased in

          1985, 3.5% for  the 1986 sale, and approximately 6%  for the 1986

          purchase of the new CATS.  

                    Between 1985 and 1987,  Appellants purchased a total of

          $165,000 worth  of  three Shearson-packaged  limited  partnership

          interests.   The  first  was  purchased  in  June  of  1985,  for

          $100,000.  On  or about the purchase date, Bladd, as Trustee, and

          Justman  executed  a  Subscription  Agreement  under  penalty  of

          perjury.   According to this agreement,  they acknowledged, inter
                                                                      _____

          alia, that (i) they  received the prospectus; (ii) there  was not
          ____

          expected  to be a public  market for their  investment; and (iii)

          there  were  risks  involved,  which  the  prospectus  disclosed.

          Appellants were sent prospectuses which similarly disclosed risks

          involved  when they purchased $40,000 worth of the second limited

          partnership  interest  in  September   of  1985,  and  when  they

          purchased $25,000 of the third in June of 1987.

                    Each of the  Participants, including Bladd  as Trustee,

          received monthly  statements, as  did Justman's accountant,  Nick

          Ben-Meir  ("Ben-Meir").   The  monthly  statements disclosed  the

          transactions which  occurred during the particular  month as well

          as a summary of the Plan's portfolio but did not separately break

          out the amount  of commissions charged.   The monthly  statements

          listed the "face amount" of the limited partnerships, but not the

                                         -4-

          market value.   As of  January 1986 they  included the  following

          statement: "The face amount  does not necessarily reflect current

          market  value."   Appellants  also received  quarterly "Portfolio

          Reviews,"  which consisted of two documents:  (i) a chart setting

          forth  the Plan's  portfolio, including  the investment,  date of

          purchase, amount invested, current market value, and yield, among

          other  information; and  (ii) an  investment pyramid  showing the

          relative  safety  of  each   investment  and  its  market  value,

          including  the   total  account   value.    Unlike   the  monthly

          statements,  the record  shows  that the  portfolio review  dated

          October 1988 lists as the market value what was actually the face

          amount of the interests in the limited partnerships.  In the  May

          1990 portfolio review, the limited partnerships are listed in the

          "amount  invested"  column,  with  two  of  them  appearing  with

          undefined  subtractions  for  "ROC"  which  exceed  $19,000;  the

          corresponding "market value" column is blank.  Bladd, as Trustee,

          also received  letters from McHugh  as early as  June of  1985 in

          which  he offered both to  help him review  the Plan's investment

          objectives and results obtained and to discuss how Shearson could

          be of greater assistance. 

                    While Ben-Meir did not  receive the statements with the

          purpose of reviewing Hegenbart's investment decisions, the record

          shows he did review some potential investments as early as May of

          1986.  In October  of 1988, Justman received  a letter from  Ben-

          Meir  regarding  an  analysis of  Justman's  portfolio.   In  the

          letter,  Ben-Meir  communicated  that  he  had  exchanged   "some

                                         -5-

          extremely  sharp  words" with  Hegenbart  regarding  some of  the

          figures shown in  the analysis, particularly with  respect to the

          limited partnership  interests.  The  letter stated  that all  of

          them are  worth "far  below their  cost" and "strongly  advise[d]

          [Justman]   not  to  enter  into  any  more  of  these  types  of
                      ___

          investments,"   because   the   "'loading'  charges   (fees   and

          commissions  off  the  top),  together  with  their  continuingly
                       _____________

          reduced value for tax purposes . . . make them unattractive . . .

          ."  (Emphasis  in  original).     Ben-Meir  then  expressed  that

          "[d]espite [Hegenbart's] repeated statements  to me that she only

          has  your best interest at heart, my instincts say otherwise, and

          I would urge you, once again, to request and obtain an accounting

          of  the fees  and commissions  earned by  Shearson and  her  as a

          result of her placing you in all these [l]imited [p]artnerships."

          Finally, the letter closed with the recommendation that "[i]f you

          decide to  continue using  [Hegenbart] to manage  your portfolio,

          that's  okay,  but  you  should  clearly  change  the  amount  of

          discretion  you have been allowing, so that no purchases or sales

          are  made without  your  complete  review  of all  proposals  and

          direction."

                    In late  July to August  1990, the  Plan accounts  were

          transferred from Shearson.   Some time thereafter, the Plan's new

          broker  informed   Bladd  that  the  limited   partnerships  were

          unsuitable for investors desiring safety and were worth less than

          the amount reflected in  the latest review, confirming Ben-Meir's

          October 1988 observations.  Between the summers of 1991 and 1992,

                                         -6-

          internal  Shearson "activity reports" produced during arbitration

          proceedings   brought  by  Justman   against  Shearson2  revealed

          information regarding the  excessive commissions, also confirming

          Ben-Meir's  observations.  Appellants  maintain  that  they  only

          learned  of the  Plan's losses  resulting from  the bond  swap in

          January of 1994, when they were informed by counsel whom they had

          retained in October of 1992.  

                    Pursuant  to  an  agreement   between  the  parties  to

          arbitrate disputes, Appellants commenced  arbitration proceedings

          with  the NASD  by filing a  Uniform Submissions  Agreement dated

          August  20,  1993,  seeking  recovery  for  alleged  breaches  of

          fiduciary duty by  Appellees.   On motion by  the Appellees,  the

          NASD Director ruled on  May 15, 1994, that  virtually all of  the

          claims  were ineligible for  arbitration under Section  15 of the

          NASD  Code of  Arbitration Procedure,  because all  trades giving

          rise to  the claims  occurred more  than six  years prior  to the

          filing of the arbitration in August of 1993.

                    On October  7, 1994, Appellants filed  the civil action

          below.   In  their  complaint, Appellants  allege that  Appellees

          violated their purported fiduciary duty3  to the Plan under ERISA
                              
          ____________________

          2  In that proceeding, Seth Justman v. Shearson Lehman Hutton and
                                 ____________    __________________________
          Kathleen Hegenbart, NASD No.  90-02937, Justman sought damages as
          __________________
          a result of  alleged unlawful actions resulting  in large losses.
          The NASD docket reveals that these proceedings  were commenced on
          October 19, 1990 and closed on June 3, 1992.

          3   Appellees' motion for  summary judgment also  argued that the
          claims were  barred because Appellees were  not fiduciaries under
          ERISA.   The  district court  did not  rule on  this issue.   For
          purposes  of  this  appeal,  we assume,  without  deciding,  that
          Appellees  were under  a fiduciary  duty.   See Maggio  v. Gerard
                                                      ___ ______     ______

                                         -7-

          with respect  to the three limited partnership  interests and the

          "bond swap."   Appellants contend  the following: (i)  that these

          transactions were  unsuitable for the Plan  and were inconsistent

          with its investment  objectives; (ii) that Hegenbart, in order to

          obtain higher  commissions, made fraudulent  statements to induce

          the  Participants, whom  she knew were  unsophisticated investors

          relying on her investment advice, into making these transactions;

          and (iii) that in connection with the bond swap Appellees charged

          commissions grossly exceeding the  rate Hegenbart had represented

          would  be  charged.    Appellants  subsequently  filed  a  motion

          compelling  arbitration of  all  claims or,  in the  alternative,

          staying arbitration  pending adjudication  by jury trial  of non-

          arbitrable claims.   In response, Appellees  filed an answer  and

          counterclaim for declaratory judgment, opposition  to Appellants'

          motion, and a motion for summary judgment as to the complaint and

          counterclaim.  Pending disposition of  these motions,  Appellants

          requested review of the decision by the Director of the NASD.  On

          January 10,  1995, the arbitration panel  affirmed the Director's

          decision.    On  May  9,  1995,  the  district  court  entered  a

          memorandum  and interlocutory  order by which  Appellees' summary

          judgment  motion was granted.  The  district court concluded that

                              
          ____________________

          Freezer & Ice, Co., 824 F.2d 123, 129 (1st Cir. 1987) (finding no
          __________________
          need to resolve merit of allegations that uncles and brothers, as
          fellow  shareholders in  a  close corporation,  owed plaintiff  a
          fiduciary  duty).   For  a recent  discussion  of ERISA  and,  in
          particular, whether  ERISA  authorizes suits  for  money  damages
          against nonfiduciaries who knowingly participate in a fiduciary's
          breach of duty,  see J.  Mertens v. Hewitt  Associates, ___  U.S.
                               ___________    __________________
          ___, 113 S. Ct. 2063 (1993).

                                         -8-

          Appellants'   claims  were  time-barred  under  ERISA's  six-year

          statute of limitations on the  grounds that, under the fraudulent

          concealment doctrine  as applied in this  Circuit, Appellants had

          been  placed on  inquiry  notice  --  by  their  receipt  of  the

          prospectuses and monthly statements -- more than six years before

          commencing their cause of  action.  After voluntary dismissal  of

          Appellees' counterclaims without prejudice,  the court entered  a

          final judgment on June 23, 1995.  This appeal followed.

                                  STANDARD OF REVIEW
                                  STANDARD OF REVIEW
                                  __________________

                    We review a district  court's grant of summary judgment

          de novo and,  like the district court,  review the record in  the
          _______

          light  most  favorable  to  the  non-moving  party.   See,  e.g.,
                                                                ___   ____

          Barbour v. Dynamics Research  Corp., 63 F.3d 32, 36-37  (1st Cir.
          _______    ________________________

          1995); Woods v. Friction, 30 F.3d  255, 259 (1st Cir. 1994).  Our
                 _____    ________

          review is limited to  the record as it stood  before the district

          court at  the time of its ruling.   Voutour v. Vitale,  761  F.2d
                                              _______    ______

          812, 817 (1st  Cir. 1985),  cert. denied, 474  U.S. 1100  (1986).
                                      ____________

          Summary judgment is appropriate when "the pleadings, depositions,

          answers to interrogatories, and admissions on file, together with

          the affidavits, if any, show that there is no genuine issue as to

          any  material fact  and that  the moving  party is entitled  to a

          judgment as a matter of law."  Fed. R. Civ. P. 56(c).  A material

          fact is one which "has the potential to affect the outcome of the

          suit   under   the   applicable   law."     Nereida-Gonz lez   v.
                                                      ________________

          Tirado-Delgado, 990 F.2d 701, 703 (1st Cir. 1993).  If the moving
          ______________

          party demonstrates  that  "there is  an  absence of  evidence  to

                                         -9-

          support the non-moving  party's case," the  burden shifts to  the

          non-moving party to establish the existence of a genuine material

          issue.   FDIC v.  Municipality of Ponce,  904 F.2d  740, 742 (1st
                   ____     _____________________

          Cir. 1990) (quoting Celotex  Corp. v. Catrett, 477 U.S.  317, 325
                              ______________    _______

          (1986)).   Thus,  the nonmovant  bears the  burden of  placing at

          least one material fact into dispute once the moving party offers

          evidence of the absence of a genuine issue.  Darr  v. Muratore, 8
                                                       ____     ________

          F.3d 854,  859 (1st Cir. 1993);  see also Celotex Corp., 477 U.S.
                                           ________ ____________

          at 322  (1986) (stating that Fed. R.  Civ. P. 56(c) "mandates the

          entry of summary judgment,  ... upon motion, against a  party who

          fails  to make a showing sufficient to establish the existence of

          an  element essential  to that  party's case,  and on  which that

          party  will bear  the burden  of   proof at  trial.").   In other

          words,  neither  "conclusory allegations,  improbable inferences,

          and  unsupported  speculation,"  Medina-Mu oz  v.  R.J.  Reynolds
                                           ____________      ______________

          Tobacco  Co., 896  F.2d  5,  8  (1st  Cir.  1990),  nor  "[b]rash
          ____________

          conjecture coupled with earnest hope that something concrete will

          materialize, is  []sufficient to block summary  judgment." Dow v.
                                                                     ___

          United Bhd. of Carpenters, 1 F.3d 56, 58 (1st Cir. 1993).   
          _________________________

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                    Resolution of  this appeal  requires that we  determine

          whether the ERISA statute of limitations, which is codified at 29

          U.S.C.    1113,4 applies to bar Appellants' action.  Section 1113
                              
          ____________________

          4  Section 1113 provides as follows:

                      No  action may  be  commenced under  this
                      subchapter with respect to  a fiduciary's
                      breach  of  any responsibility,  duty, or

                                         -10-

          requires that  Appellants commence their action  within six years

          from the date of the last transaction giving rise to their claim,

          unless  they demonstrate  "fraud or  concealment," in  which case

          they  must commence their action  within six years  from the date

          they discover the breach.

                    The first  step requires us to determine "the date when

          the  last  action  which constituted  a  part  of  the breach  or

          violation" occurred -- one of a number of temporal determinations

          to  be  made.   29  U.S.C.    1113(1)(A).    Here, the  purported

          violations in connection  with the limited partnership  interests

          occurred in June  of 1985, September of  1985, and June of  1987,

                              
          ____________________

                      obligation  under  this  part,   or  with
                      respect  to  a  violation of  this  part,
                      after the earlier of--

                           (1) six years  after (A) the date
                         of    the    last   action    which
                         constituted a part of the breach of
                         the violation,  or (B) in  the case
                         of an omission, the latest  date on
                         which  the   fiduciary  could  have
                         cured the breach or violation, or
                           (2)   three   years   after   the
                         earliest   date    on   which   the
                         plaintiff  had actual  knowledge of
                         the breach or violation;

                         except that in the case of fraud or
                         concealment,  such  action  may  be
                         commenced not later than  six years
                         after the date of discovery of such
                         breach or violation.

          29 U.S.C.    1113 (1994).  We note that  Section 1113 was amended
          by Congress  both  in  1987  and  in  1989.    Neither  of  these
          amendments, however, have any bearing on this appeal. 

                                         -11-

          and those made  in connection with the bond  swap occurred in May

          of 1986.5  

                    The  second requires us to determine  when the cause of

          action  was  commenced.    The district  court  assumed,  without

          deciding, that NASD Code   18(a) tolls the statute of limitations

          in this case.  The district court concluded that August 20, 1993,

          the  date  on  which  Appellants  filed  the  Uniform  Submission

          Agreement  with  the NASD,6  should  serve  as  the date  marking

          commencement of  the action.   The  district court  reasoned that

          even  by using  that  date,  which  was  more  favorable  to  the

          Appellants,  the  purported  violations   --  in  June  of  1985,

          September of 1985, May  of 1986 and  June of 1987 --  nonetheless

          occurred more  than six  years earlier.   Neither party  disputes

          this  reasoning on appeal  and, because it has  no bearing on the

          outcome, we  adopt without  further comment the  district court's

          use of August 20, 1993 as the date the action was commenced.

                              
          ____________________

          5   Appellants  state  in  their  brief  that  the  last  alleged
          commission overcharges occurred in  December 15, 1988.  Appellees
          contend that the last commissions were charged in June 1987.  Our
          review of the record indicates that there was a commission charge
          on June 24, 1987 for (what appears to be) about $1,200.  The only
          evidence we  can find of commission charges in 1988 is a March 2,
          1988  entry corresponding  to a  distribution where  the initials
          "CLP" appear  in the "commissions"  column.  We do  not find this
          alone  to be  sufficient evidence  supporting resolution  of this
          "dispute" in favor of Appellants.   

          6   Section  18(a)  of the  NASD  Code of  Arbitration  Procedure
          provides  that  "where  permitted  by applicable  law,  the  time
          limitation  which   would  otherwise   run  or  accrue   for  the
          institution of  legal proceedings  shall be tolled  where a  duly
          executed Submission Agreement is filed by Claimants."  

                                         -12-

                    Because Appellants filed the action below more than six

          years  after the  last  transaction giving  rise  to the  alleged

          violations, we turn next to the question of whether the "fraud or

          concealment"  exception applies to  toll the  limitations period.

          Appellants  argue that it does, and that the district court erred

          when it held to the contrary.  The interpretation of the fraud or

          concealment clause of Section 1113 is one of first impression for

          this Circuit.  We address the various issues this question raises

          in turn.

                                         -13-

                    A.   Fraudulent  Concealment  and the  Proper Discovery
                    A.   Fraudulent  Concealment  and the  Proper Discovery
                         Standard under Section 1113
                         Standard under Section 1113

                    The first  issue involves  a determination of  when the

          limitations period begins to run in cases of fraud or concealment

          under Section 1113.   Resolution of this question requires  us to

          decide  what  standard --  objective or  subjective  -- is  to be

          applied  when  determining  the  "date of  discovery."    As  the

          district court  noted,  other circuits  have interpreted  Section

          1113  to   incorporate  the  federal   doctrine  of   "fraudulent

          concealment," which  operates to toll the  statute of limitations

          until  the  plaintiff in  the  exercise  of reasonable  diligence

          discovered  or  should  have  discovered  the  alleged  fraud  or

          concealment.  See Larson v. Northrop Corp., 21 F.3d 1164, 1172-74
                        ___ ______    ______________

          (D.C. Cir. 1994) (Campbell,  J., sitting by designation) (holding

          that  Section 1113's fraud  or concealment exception incorporates

          the  common  law  fraudulent  concealment  doctrine);  Martin  v.
                                                                 ______

          Consultants &  Administrators, Inc., 966 F.2d  1078, 1093-96 (7th
          ___________________________________

          Cir. 1992) (same); Schaefer v. Arkansas Medical Society, 853 F.2d
                             ________    ________________________

          1487,  1491-92 (8th Cir. 1988) (same); see also Bailey v. Glover,
                                                 ________ ______    ______

          88  U.S.  342,  349  (1875)  (discussing  fraudulent  concealment

          doctrine).

                    After  noting  the  approach  followed  in  Larson  and
                                                                ______

          Martin, the district  court concluded  that, even if  we were  to
          ______

          hold  that Section 1113 could be tolled by showing something less

          than   "fraudulent  concealment,"  Appellants   would  still  not

          prevail.  In reaching its conclusion, the district court reasoned

          that in light of our interpretation of the fraudulent concealment

                                         -14-

          doctrine  as  applied  to  limitation periods  contained  in  the

          Securities Exchange  Act of 1933  and 1934, Appellants  will have

          failed to meet their burden of production alleging facts of fraud

          or concealment if  Appellees show that Appellants were on inquiry

          notice of the alleged  violations more than six years  before the

          filing date.  See Kennedy v. Josephthal & Co., 814 F.2d 798, 802-
                        ___ _______    ________________

          03 (1st Cir. 1987)  (holding that plaintiffs are on  notice where

          there are "sufficient storm warnings to alert a reasonable person

          to the  possibility that there were  either misleading statements

          or significant omissions involved") (quoting Cook v. Avien, Inc.,
                                                       ____    ___________

          573 F.2d 685,  697 (1st Cir.  1978)).   The district court  found

          that Appellants were on "discovery" or "inquiry" notice more than

          six  years prior to August 20, 1993, due  to their receipt of the

          prospectuses and  monthly statements Appellees sent  them.  Thus,

          it  was  because  the district  court  found  that  the documents

          received  by  Appellants contained  "sufficient  storm warnings,"

          which would have  alerted them  to the possibility  of fraud  had

          they   acted  with  reasonable   diligence,  that   it  concluded

          Appellants failed  to carry their burden  of production regarding

          the issue of fraud or concealment.

                    In  challenging the  decision  below, Appellants  argue

          that the district court erred in its construction of Section 1113

          when  it  applied the  objective  standard  under the  fraudulent

          concealment  doctrine.    Specifically, Appellants  contend  that

          because  Section 1113  involves breaches  of fiduciary  duty, the

          term  "discover" used  in  connection with  fraud or  concealment

                                         -15-

          should  mean that  the six-year limitation  period begins  to run

          only   when  Appellants,   who  are   unsophisticated  investors,

          subjectively gained knowledge that their  fiduciary made material

          misrepresentations  to  them.    In  support  of  this  argument,

          Appellants point to the plain language of Section 1113 and to the

          fact that Congress  did not  include the phrase  "knew or  should

          have  known."    In  addition,  they  maintain  that  adopting  a

          subjective standard comports with Congress' mandate that ERISA be

          liberally  construed  to  protect pension  beneficiaries  and  to

          ensure the highest standards of fiduciary conduct.  See 29 U.S.C.
                                                              ___

            1001(a),  (b).     In  this  regard,  they   contend  that  the

          Congressional mandate  is not  properly served by  requiring that

          participants   heed  storm   warnings  and   exercise  reasonable

          diligence  where affirmative  acts of  fraud and  concealment are

          alleged.   Finally,  Appellants insist  that if some  standard of

          reasonable  diligence  is  to be  applied,  then,  at a  minimum,

          traditional factors used in assessing reasonable diligence -- the

          existence of a  fiduciary relationship, the nature  of the fraud,

          the  opportunity to  discover the fraud,  the subsequent  acts of

          defendants, and the sophistication of the plaintiffs -- should be

          considered  before granting  summary judgment.   See  Maggio, 824
                                                           ___  ______

          F.2d at 128; Cook, 573 F.2d at 697.
                       ____

                    As  always,  we  begin   with  the  relevant  statutory

          language.  Section 1113's tolling provision provides that "in the

          case  of fraud or concealment,  such action may  be commenced not

          later than six years  after the date of discovery  of such breach

                                         -16-

          or violation."   29 U.S.C.    1113.  As the  District of Columbia

          Circuit recently  noted, this  is the  only provision  in Section

          1113 for delaying the accrual of the limitations period until the

          date of discovery.   See Larson,  21 F.3d at 1172.   By its  very
                               ___ ______

          language, then, Section 1113 explicitly incorporates the  federal

          common law "discovery rule," which postpones the beginning of the

          limitation  period from the date when the plaintiff is injured to

          the date the  injury is  discovered.  Cada  v. Baxter  Healthcare
                                                ____     __________________

          Corp.,  920 F.2d  446, 450  (7th Cir.  1990).   As we  noted when
          _____

          interpreting the  statute of limitations contained  in Section 13

          of the Securities  Act of  1933, which is  applicable to  Section

          12(2) of that Act, "the doctrine of fraudulent concealment is the

          common law counterpart of  the 'discovery' standard prescribed by

            13 to limit  actions brought under   12(2)."  Cook, 573 F.2d at
                                                          ____

          695;   see Anixter v.  Home-Stake Production Co.,  939 F.2d 1420,
                 ___ _______     ________________________

          1434 n.18 (10th  Cir. 1991) (citing  Cook for this  proposition).
                                               ____

          We concluded in Cook that the running of Section 13 was triggered
                          ____

          by  the very same considerations used to determine when the cause

          of  action accrues and when  the statute is  tolled under federal

          common law.   Cook, 573 F.2d  at 695; see Holmberg  v. Armbrecht,
                        ____                    ___ ________     _________

          327  U.S. 392,  397  (1946) (holding  that equitable  doctrine of

          fraudulent  concealment is  read  into every  federal statute  of

          limitations).   We  find that  Section 1113's  discovery rule  is

          almost  identical to that of  Section 137 and  perceive no reason

                              
          ____________________

          7  Section 13 provides in pertinent part:

                                         -17-

          why  we should not follow  Cook's approach and  hold that Section
                                     ____

          1113  also  incorporates  the  fraudulent  concealment doctrine.8

          Moreover,  we have yet to  encounter a convincing  argument as to

          why we should part company from those circuits which have already

          addressed this issue and have concluded that  Section 1113 indeed

          incorporates the fraudulent concealment doctrine.  See Larson, 21
                                                             ___ ______

          F.3d at 424-25; Martin, 966  F.2d at 1093; Schaefer, 853  F.2d at
                          ______                     ________

          1491-92; see also Barker  v. American Mobil Power Corp.,  64 F.3d
                   ________ ______     __________________________

          1397, 1401-02  (9th Cir. 1995)  (noting with approval  that other

          circuits have so held).9  
                              
          ____________________

                      No  action shall be maintained to enforce
                      any liability created under Section . . .
                      [12(2)]  of  this  title  unless  brought
                      within  one  year   after  the  date   of
                      discovery of the  untrue statement or the
                      omission, or after such  discovery should
                      have  been  made   by  the  exercise   of
                      reasonable diligence . . . .

          15 U.S.C.   77m (1994). 

          8   In reaching this  decision, we  have taken  into account  the
          different policies underlying, and  protections afforded by,  the
          Securities &  Exchange Acts of 1933  and 1934 and  ERISA.  Absent
          statutory or other Congressional directive, we find no reason why
          our interpretation  of the statutes of limitations  should not be
          guided by the same approach.

          9   Where  courts differ  is  on how  "in the  case  of fraud  or
          concealment"  should   be  construed,  specifically   whether  it
          includes  both  so-called  "self-concealing  wrongs"  as well  as
          "active  concealment"    that  is separate  from  the  underlying
          wrongdoing.  See  generally Martin, 966 F.2d  at 1093-96, 1101-04
                       ______________ ______
          (Posner, J., concurring); Radiology  Center, 919 F.2d at 1220-21;
                                    _________________
          see also footnote 16 infra.   Resolution of this appeal  does not
          ________             _____
          require us to make a definitive determination as to which side of
          this dialogue  we adhere.   We  merely note  for the  moment that
          because the  fraudulent concealment  doctrine as applied  in this
          Circuit includes both categories, see, e.g., Kennedy, 814 F.2d at
                                            ___  ____  _______
          802,  and the  fact  that there  is  nothing in  the  language of
          Section  1113 to suggest otherwise, we are inclined to think that

                                         -18-

                    Next, with  respect to the scope of  "discovery" in the

          fraud  or  concealment  exception,   we  believe  that  the  term

          encompasses  both  actual and  constructive  discovery.   As  the

          Seventh Circuit  noted in  Martin, Congress  knew how to  require
                                     ______

          "actual  knowledge," and  did so  for the  three-year limitations

          period  under  Section  1113(2).    Holding  that  the  fraud  or

          concealment exception extends the limitations period to six years

          from  the date of actual  discovery would conflict  with the fact

          that  the  preceding three-year  period  runs  from the  date  of

          "actual  knowledge."   In addition,  incorporating the  notion of

          constructive  discovery  comports  with  the  general requirement

          under the fraudulent concealment doctrine that there be a showing

          of  reasonable diligence  before tolling  is allowed.10   Martin,
                                                                    ______

          966 F.2d at 1096; Maggio,  824 F.2d at 127-28; Kennedy, 814  F.2d
                            ______                       _______

          at 802; Cook, 573 F.2d at 695.  
                  ____

                    We  turn, lastly,  to  the appropriate  standard to  be

          applied  when  determining  the  "date  of  discovery."    As  we

          emphasized in Maggio, whether  a plaintiff should have discovered
                        ______

          the alleged fraud "is an objective question" requiring the  court

          to "determine if the plaintiff  possessed such knowledge as would

          alert  a  reasonable  investor  to  the  possibility  of  fraud."

                              
          ____________________

          the  scope  of Section  1113's  incorporation  of the  fraudulent
          concealment doctrine  includes both.    See Martin,  966 F.2d  at
                                                  ___ ______
          1094-95.

          10   There is authority that reasonable diligence is not required
          in cases  of active concealment.  See,  e.g., Martin, 966 F.2d at
                                            ___   ____  ______
          1096  nn.19, 20, 1098; Lewis v. Herrmann, 755 F. Supp. 1137, 1148
                                 _____    ________
          (N.D. Ill. 1991).

                                         -19-

          Maggio,  824 F.2d at 128 (citing Cook,  573 F.2d at 697).  We are
          ______                           ____

          unpersuaded by  Appellants' insistence  that by adopting  such an

          objective standard  we will undercut ERISA's  goals regarding the

          protection of  pension  benefits.   First,  Appellants'  argument

          seems  to ignore the  plain language  of Section  1113 explicitly

          calling for a "discovery" standard, which has been interpreted to

          employ  a  "known or  should have  known"  standard.   See United
                                                                 ___ ______

          States  v. James Daniel Good  Property, 971 F.2d  1376, 1381 (9th
          ______     ___________________________

          Cir. 1992).  

                    Second, while this inquiry is  an "objective" question,

          the  determination  of  whether  a  plaintiff actually  exercised

          reasonable diligence  is a more  subjective one.  In making  that

          assessment, we  "focus[] upon  the circumstances of  a particular

          case, including  the existence  of a fiduciary  relationship, the

          nature of  the fraud  alleged, the  opportunity  to discover  the

          fraud, and the  subsequent actions of  the defendants."   Maggio,
                                                                    ______

          824 F.2d  at 128; Kennedy,  814 F.2d  at 803  (stating that  "the
                            _______

          exercise of reasonable diligence  is determined 'by examining the

          nature of  the misleading statements alleged,  the opportunity to

          discover the misleading statements, and the subsequent actions of

          the parties'") (quoting  Cook, 573 F.2d at 696).  We believe that
                                   ____

          because we engage  in a "subjective"  inquiry when assessing  the

          exercise  of  reasonable diligence,  ERISA's  goals  will not  be

          undercut by  applying an objective standard  when determining the

          "date of discovery."  Whatever apparent harshness that may result

                                         -20-

          from application  of the objective standard will  be mitigated by

          our consideration of those more subjective factors. 

                    We also remind Appellants that  "[a]lthough any statute

          of limitations is necessarily arbitrary, the length of the period

          reflects a  value  judgment concerning  the  point at  which  the

          interests in favor of  protecting valid claims are outweighed  by

          the  interests in  prohibiting  the prosecution  of stale  ones."

          Johnson v.  Railway Express  Agency, Inc., 421  U.S. 454,  463-64
          _______     _____________________________

          (1975).    Section  1113  explicitly time  bars  actions  against

          fiduciaries which are  not commenced within  six years of  either

          the date  of the last  transaction or,  in the case  of fraud  or

          concealment, the date  of discovery.  29 U.S.C.    1113.  In this

          regard,  we note that Section 1113 states "after the earlier of,"

          not "after the later of," which makes it a more stringent statute

          of  limitations than,  for  example,  ERISA's Section  1451(f).11

          The  protections Congress  established  under  ERISA are  clearly

                              
          ____________________

          11   Section 1451(f) provides that, "An action under this section
          may not be brought after the later of--

                      (1) 6  years after the date  on which the
                      cause of action arose, or

                      (2) 3  years after  the earliest date  on
                      which  the  plaintiff acquired  or should
                      have  acquired  actual  knowledge of  the
                      existence of such cause of action; except
                      that in the case of fraud or concealment,
                      such action may be brought not later than
                      6 years after  the date  of discovery  of
                      the existence of such cause of action.

          29 U.S.C.   1451(f) (1994).  In interpreting this statute, courts
          have  acknowledged  that     1451(f)(2), but  not     1451(f)(1),
          incorporates a discovery rule.  See Larson, 21 F.3d at 427. 
                                          ___ ______

                                         -21-

          available to plaintiffs who do not let their rights pass them by.

          Finally,  we note further that  none of the  other circuit courts

          which  have interpreted  Section 1113  have adopted  a subjective

          standard despite  the fact  that those  cases, as here,  involved

          alleged breaches of fiduciary duty.12  

                    In summary  then, we hold that the fraud or concealment

          tolling  provision of  Section 1113  incorporates  the fraudulent

          concealment  doctrine,  which operates  to  toll  the statute  of

          limitations  "where a  plaintiff has  been injured  by fraud  and

          'remains  in ignorance  of  it  without  any  fault  or  want  of

          diligence  or  care on  his  part  .  .  .  until  the  fraud  is

          discovered, though  there be no special  circumstances or efforts

          on the part of the party committing the fraud to  conceal it from

          the  knowledge of the  other party.'"  Holmberg,  327 U.S. at 397
                                                 ________

          (quoting  Bailey, 88 U.S. at  348); see Maggio,  824 F.2d at 127.
                    ______                    ___ ______

          Accordingly,  in  order  to  toll the  limitations  period  under

          Section 1113's fraud  or concealment  exception, Appellants  must

          demonstrate that "(1)  defendants engaged in a  course of conduct

          designed  to conceal  evidence of  their alleged  wrong-doing and

          that  (2) [the  plaintiffs] were  not on  actual or  constructive

          notice of that evidence, despite (3) their exercise of reasonable

          diligence."  Larson, 21 F.3d at 1172  (quoting Foltz v. U.S. News
                       ______                            _____    _________

                              
          ____________________

          12  While the parties did not cite to any legislative history, we
          have  not  found  much  that is  particularly  helpful  regarding
          Congress' intent with  respect to Section 1113.   Accord, Larson,
                                                            ______  ______
          21 F.3d at 1171; Radiology Center, 919 F.2d at 1221.  
                           ________________

                                         -22-

          &  World Report,  Inc.,  663  F.  Supp.  1494,  1537  (D.C.  Cir.
          ______________________

          1987)).13   Furthermore, it  is Appellants' burden  under Federal

          Rule  of Civil  Procedure  9(b) to  plead with  particularity the

          facts  giving   rise   to  the   fraudulent  concealment   claim.

          Plaintiffs' attempt to toll the statute will fail if the evidence

          shows  that   they  were  on  discovery  notice  of  the  alleged

          violations  of  fiduciary duty  more  than six  years  before the

          filing date.  See Truck Drivers & Helpers Union, Local No. 170 v.
                        ___ ____________________________________________

          NLRB, 993  F.2d 990, 998 (1st Cir.  1993) (noting that the burden
          ____

          of  showing  reasonable diligence  normally  falls  on the  party

          seeking  to   toll  the   statute  of  limitations   by  alleging

          affirmative acts of concealment  under the doctrine of fraudulent

          concealment).   This  Circuit  has characterized  the facts  that

          trigger  discovery or  constructive notice  as  "sufficient storm

          warnings  to alert  a reasonable  person to the  possibility that

          there were either misleading  statements or significant omissions

          involved."   Cook, 573 F.2d  at 697.   While  discovery does  not
                       ____

          require  that plaintiffs  become fully  aware of  the nature  and

          extent  of the  fraud,  it  is  these  "storm  warnings"  of  the

          possibility  of fraud that trigger their duty to investigate in a

          reasonably  diligent manner, and their cause  of action is deemed

          to  accrue on  the  date when  they  should have  discovered  the

                              
          ____________________

          13  We adopt the formulation most recently reiterated by a member
          of  this Court in Larson, which sets  forth a clear test and does
                            ______
          not  differ  in  substance  from  our  usual  description of  the
          fraudulent  concealment doctrine.  See, e.g., Maggio, 824 F.2d at
                                             ___  ____  ______
          127 (setting forth Bailey standard).
                             ______

                                         -23-

          alleged    fraud.        Maggio,    824    F.2d    at    128.    
                                   ______

                    B.   Application of the Fraud or Concealment Exception
                    B.   Application of the Fraud or Concealment Exception

                    Having set forth  the applicable standard and  relevant

          considerations,  we turn  to  the application  of Section  1113's

          fraud or  concealment exception.  In  their complaint, Appellants

          allege  that Appellees  engaged  in a  fraudulent trading  scheme

          comprising    purchases   of   unsuitably   high   risk   limited

          partnerships,  account  churning,  and   commission  overcharges.

          Appellants  contend  that  Appellees,  in  furtherance  of  their

          scheme,  made  material   oral  and  written   misrepresentations

          regarding  the value and safety of the investments, the amount of

          profit generated  by the trades,  and the amounts  of commissions

          charged.

                    For purposes of disposing of  this appeal, we need  not

          make  any  specific  findings  regarding  the  issue  of  whether

          Appellees   committed   or    concealed   the   alleged    fraud.

          Nevertheless, we review the record in the light most favorable to

          Appellants,  the non-moving  party, as  we determine  whether the

          district court erred  when it granted  summary judgment based  on

          its  conclusion that  Appellants  had not  offered evidence  from

          which a reasonable juror could conclude that Appellants would not

          have  known,  in  the  exercise of  reasonable  diligence,  about

          Appellee's alleged violations six years or more before August 20,

          1993,  i.e.,  on  or before  August  20,  1987.   We  discuss the
                 ____

          transactions in turn.

                    1.   The Limited Partnerships
                    1.   The Limited Partnerships
                         ________________________

                                         -24-

                      A.     The   Alleged   Misrepresentations   and   the
                      A.     The   Alleged   Misrepresentations   and   the
                             ______________________________________________

          Prospectuses
          Prospectuses
          ____________

                    With   respect  to   the  three   limited  partnerships

          purchased   in  June   1985,  September   1985,  and   June  1987

          respectively, Appellants  allege  that Appellees  violated  their

          fiduciary  duty  by  orally  misrepresenting the  risks  and  the

          suitability  of  the these  investments.   They contend  that the

          names14  of  the  limited partnership  interests  were  deceptive

          because they suggest safe and suitable pension investments.  They

          also   maintain  that   the   portfolio   reviews   substantiated

          Hegenbart's misrepresentations so that Appellants were induced to

          retain  the  interests.    Even  assuming  that  the titles  were

          "deceptive"  and that  the  reviews were  misleading, the  record

          shows that Appellants received prospectuses on or  about the date

          each of these interests  were purchased.  The prospectuses  fully

          disclosed the suitability requirements and risk factors and, when

          read with reasonable  diligence, plainly  contradict the  alleged

          oral  misrepresentations that  these  were low-risk  investments.

          Appellants have  not alleged  that  any of  the risk  disclosures

          contained in the  prospectuses are fraudulent.   Even viewing the

          facts in the light most favorable to the Appellants, we find that

          these disclosures provided them with sufficient storm warnings of

          the  alleged misrepresentations  and  the  possibility of  fraud.

          Maggio,  824 F.2d  at  129  (holding  that  financial  data  that
          ______

                              
          ____________________

          14   The names  were "Balcor Pension  Investors VI,"  "Commercial
          Development Fund 85" and "Federal Insured Mortgage Investors II."

                                         -25-

          contradicted  what  plaintiffs  were   led  to  believe  provided

          sufficient  storm warnings);  Kennedy, 814  F.2d at  801 (holding
                                        _______

          that discrepancy between oral misrepresentations  and an offering

          memorandum  constituted  inquiry  notice  commencing  limitations

          period).   Thus, we conclude that receipt of the prospectuses put

          Appellants  on discovery notice of the alleged misrepresentations

          regarding the suitability and riskiness of the partnerships at or

          around June of 1985, September of 1985 and June of 1987. 

                    Appellants  insist, however,  that there  are "numerous

          disputed  issues  of   material  fact"   regarding  the   limited

          partnerships which  were relevant on  summary judgment.   We find

          only  one relevant  --  Appellants' contention  that  there is  a

          factual   dispute  as   to   whether  they   ever  received   the

          prospectuses.   Appellants bolster their position  by pointing to

          the fact that Appellees  produced a subscription agreement, which

          indicates  receipt of  a prospectus,  for only  one of  the three

          limited partnerships -- the first one, purchased in June of 1985.

          They also rely on  the affidavits submitted by Justman  and Bladd

          which   deny  the   genuineness  of   their  signatures   on  the

          subscription agreement.   Finally, they  base the existence  of a

          disputed  material fact on Bladd's third  affidavit, in which for

          the first time Bladd suggests that Appellees did not tell him 

                      to read  any  prospecti relating  to  the
                      partnerships.  In fact, I am certain that
                      I  never  received   a  prospectus   from
                      Hegenbart  before  purchasing  a  limited
                                 ______
                      partnership on behalf of the Plan.

                                         -26-

          Record  Appendix,  p. 145  (emphasis  in original).    Bladd also

          states  that  he  has  "no  recollection"  of  ever  receiving  a

          prospectus  and that  his  files do  not  contain copies  of  any

          prospectuses.

                    As the  district court found,  Appellants' evidence  is

          insufficient to create a  disputed issue of fact with  respect to

          whether  they  received the  prospectuses.   First, we  note that

          Bladd's  third affidavit, dated  February 15, 1995,  is the first

          instance in which Appellants dispute  the argument that they were

          on notice by receipt of the prospectuses.  What is striking about

          this is how  late in the proceedings  this occurred -- more  than

          one  year after  Appellees  first raised  the  argument in  their

          November  30,  1994 memorandum  in  support of  their  motion for

          summary  judgment.    Appellants   did  not  dispute   Appellees'

          contention  that  they  received  prospectuses  in  either  their

          initial  or  supplemental  filings in  opposition  to  Appellees'

          motion for summary judgment, nor in Bladd's first affidavit.  The

          first   "contradiction"   appears  in   Appellants'  supplemental

          memorandum, dated February 9, 1995, where the affidavits filed by

          Justman  and  Bladd  merely  state that  the  signatures  on  the

          subscription  agreement  are  not  their  own.    Guided  by  the

          principle  that  when  reviewing motions  for  summary  judgment,

          courts should "pierce the boilerplate of the  pleadings and assay

          the  parties' proof  in  order  to  determine  whether  trial  is

          actually required," Rivera-Cotto v. Rivera, 38 F.3d 611, 613 (1st
                              ____________    ______

          Cir.  1994) (quoting Wynne v.  Tufts Univ. Sch.  of Medicine, 976
                               _____     _____________________________

                                         -27-

          F.2d 791, 794 (1st Cir. 1992), cert. denied, ___ U.S. ___, 113 S.
                                         ____________

          Ct.  1845  (1993)),  we  view with  significant  skepticism  what

          appears to be a last ditch effort to create a disputed fact where

          none exists.

                    Second, and more importantly, Bladd's statements on the

          issue  of  whether  the  prospectuses were  received  are  merely

          conjectural and, thus, not sufficient to sustain a finding that a

          disputed issue exists.  See Medina-Mu oz v. R.J. Reynolds Tobacco
                                  ___ ____________    _____________________

          Co.,  896 F.2d 5, 8 (1st Cir. 1990) ("[T]he evidence illustrating
          ___

          the factual controversy cannot  be conjectural or problematic; it

          must have substance in the sense that it limns differing versions

          of the truth  which a factfinder must resolve.").   Not only does

          Bladd's third affidavit  fail to state that the prospectuses were

          never  provided   or  received,  his  lack   of  recollection  is

          insufficient to rebut Appellees' affidavit and the acknowledgment

          of  receipt  evidenced by  the  subscription agreement.    As the

          district  court  found,  we  face Appellants'  conjecture  versus

          Appellees' direct statement of  fact.  On this alone,  the weight

          of the evidence  tips the scale in favor of  Appellees; and, when

          considered together with  Bladd's statement that he  did not find

          any prospectuses  after "he searched [his]  files carefully," the

          scale tips further  in their direction.  Bladd's statement simply

          does not  satisfy Appellants'  burden of producing  evidence that

          they  did not receive the prospectuses.  Absent any evidence that

          Bladd had either a set procedure for filing  documents or that he

          would  file prospectuses if received, their mere absence from his

                                         -28-

          files  does not provide a  factfinder with any  reasoned basis to

          believe  either that  because  Bladd's files  did  not yield  the

          prospectuses he did not receive them or that his files would have

          contained  the prospectuses had they  been received.  Finally, as

          the district  court also noted, Bladd's  affidavit only indicates

          that  he  is certain  that he  did  not receive  any prospectuses

          before  the  transactions.   It  does not  contain  any probative
          ______

          evidence   to  dispute   the   fact   that  Appellants   received

          prospectuses some time on or around the purchase dates.

                    Thus,  we  conclude that  because  Appellants' evidence

          lacks  "substance in  the  sense  that  it  [does]  not  limn[  ]

          differing versions of the truth which a factfinder must resolve,"

          id., the only reasonable  inference a factfinder could reasonably
          ___

          draw is  that  Bladd received  the prospectuses  for the  limited

          partnerships  on or  around the  time when the  transactions were

          made.   This, coupled with the sufficient storm warnings that the

          prospectuses  revealed,  leads  us  to  the  conclusion  that  no

          reasonable basis exists for a  reasonable factfinder to find that

          Appellants  were   not  on   discovery  notice  of   the  alleged

          misrepresentations regarding the limited partnerships.

                                         -29-

                      B. The Alleged Concealment and the Monthly Statements
                      B. The Alleged Concealment and the Monthly Statements
                         __________________________________________________

                    Appellants also  allege  that Appellees  concealed  the

          partnerships'  market value  by  listing them  at their  purchase

          price,  rather  than  at  their  market  value,  in  the  monthly

          statements.  The district court found that the monthly statements

          Appellants  received did  not  conceal the  market  value of  the

          limited partnerships,  because they listed the  "face amount" and

          included a statement  that "the face amount does  not necessarily

          reflect the current market value."   The district court concluded

          that based on  these undisputed facts  Appellees did not  conceal

          the market value of  these investments.  We agree.   Beginning in

          January of  1986, Appellants were  presented every  month with  a

          reminder that the face  amount did not reflect the  market value.

          A simple phone call  inquiring about the market value  would have

          exposed  the  value  and  shed  light  on  the  wisdom  of  these

          transactions.  Cook, 573 F.2d at  696-98 (finding that plaintiffs
                         ____

          were  on inquiry notice  by receipt of  ominous financial reports

          contradicting   oral   assurances);   Carluzzi    v.   Prudential
                                                ________         __________

          Securities,  Inc., 824  F. Supp. 1206,  1211-13 (N.D.  Ill. 1993)
          _________________

          (finding that  legend on monthly statements  which disclosed that

          face  value  did not  equal market  value  was sufficient  to put

          investors on notice);  Holtzman v.  Proctor, Cook &  Co., 528  F.
                                 ________     ____________________

          Supp.  9, 14 (D. Mass. 1981) (finding that confirmation slips and

          monthly statements should have  alerted reasonable persons to the

          possibility of account mismanagement).   Thus, even assuming that

          Appellees  "concealed"  the  value  of  the  limited  partnership

                                         -30-

          interests,  Appellants were  on discovery  notice of  the alleged

          concealment as  early as  January 1986.   Cook,  573 F.2d at  695
                                                    ____

          (holding  that  even  where  facts are  fraudulently  withheld  a

          plaintiff  cannot be allowed to ignore the economic status of his

          or her investment).

                    2.   The Bond Swap
                    2.   The Bond Swap
                         _____________

                    Appellants  allege  that  Appellees misrepresented  the

          value of the 1986 bond swap transaction and that, contrary to the

          district court's  finding, "a  simple reading"  of the  May 1986,

          statement would not have alerted unsophisticated investors to the

          possibly  fraudulent nature of the transaction.  We disagree.  It

          is  undisputed   that  Appellants  were   provided  with  monthly

          statements,  which  disclosed  the  transactions  Appellants  had

          authorized   Hegenbart   to   make.      Simple   arithmetic   --

          straightforward addition and subtraction -- reveals a discrepancy

          of  more  than  $68,000 between  the  debit  attributable to  the

          purchase of  the new bonds  and their market  value.   This alone

          should have alerted Appellants to the possibility that fraudulent

          statements  may  have been  made  in connection  with  the bonds'

          value.   Thus, while  Appellants maintain  that they  only became

          aware of the  losses resulting from the  bond swap in  January of

          1994, we find that they received sufficient storm warnings in May

          of 1986. 

                    3.   The Commissions
                    3.   The Commissions
                         _______________

                    Appellants  also  allege that  Hegenbart misrepresented

          that Shearson's commission charges would be below the market rate

                                         -31-

          and that they  were overcharged commissions  with respect to  the

          bond  swap transaction.  They contend that "the first notice that

          [they]  received  of  any  possible  wrongdoing  regarding  [the]

          commissions" was  during  the  summer of  1992,  when  Bladd  was

          informed that there may have been commission overcharges.  We are

          unpersuaded.    As with  the bond  swap,  the May  1986 statement

          provided  Appellants  with  sufficient storm  warnings  about the

          possibility  of excessive  commissions.   As  the district  court

          found,  the discrepancy between the debit and sale prices for the

          bonds  should  have  alerted  Appellants to  the  possibility  of

          excessive commissions and prior misrepresentations  regarding the

          rate  actually charged.  These storm  warnings were reinforced by

          the thunderous  sirens contained  in Ben-Meir's October  17, 1988

          letter  "urg[ing] . .  ., once  again, to  request and  obtain an
                                    ___________

          accounting  of  the  fees   and  commissions"  (emphasis  added).

          Contrary to Appellants' contention,  the fact that Appellees have

          not  contested  the  allegation  of  commission  overcharging  is

          irrelevant for purposes of determining whether  Appellant's claim

          is barred by the statute of limitations.  Nor is it relevant that

          the  monthly  statement  could  have broken  out  the  amount  of
                                   _____

          commissions  charged, although  such a  practice  would certainly

          have  been more  helpful to  Appellants.   What is  relevant, and

          controlling  for  purposes  of  this  appeal,  is   the  date  of

          discovery.  Here,  that date is May 1986, which  is more than six

          years before the commencement of this action in August 1993.  

                    4.   Reasonable Diligence
                    4.   Reasonable Diligence
                         ____________________

                                         -32-

                    The   storm  warnings  triggered  Appellants'  duty  to

          exercise reasonable diligence.   Kennedy, 814 F.2d  at 802; Cook,
                                           _______                    ____

          573  F.2d at 696.  Appellants contend, however, that the district

          court  erred when it required  them to show reasonable diligence.

          First,  Appellants assert  that  because the  alleged  violations

          involved  active  concealment,   as  opposed  to  self-concealing

          wrongs, there  is no requirement that  Appellants show reasonable

          diligence.   See,  e.g.,  Martin, 966  F.2d at  1096  nn. 19,  20
                       ___   ____   ______

          (noting  that courts are divided as to whether the plaintiff must

          show due  diligence in  cases  of active  concealment); Lewis  v.
                                                                  _____

          Herrmann, 775 F. Supp. 1137, 1148 (N.D. Ill. 1991) (noting that a
          ________

          plaintiff's  due diligence may be excused when a fiduciary with a

          duty  to  disclose engages  in  active  concealment).    In  this

          Circuit, however, we have held that "[i]rrespective of the extent

          of  the effort  to conceal,  the fraudulent  concealment doctrine

          will  not save  a  charging  party  who  fails  to  exercise  due

          diligence, and is thus charged with notice of a potential claim."

          Truck Drivers  & Helpers  Union, 993  F.3d at 998.   As  we noted
          _______________________________

          earlier, when the party seeking to toll the statute by fraudulent

          concealment alleges affirmative  acts of concealment,  the burden

          of showing reasonable  diligence falls on that party.  Id.  Thus,
                                                                 ___

          in  this  Circuit, by  alleging  affirmative  acts of  fraudulent

          concealment  Appellants are required  to show due  diligence.  To

          cover  all of  the bases,  we note  that we  place the  burden of

          showing reasonable diligence on  the defendant when the plaintiff

          alleges  that the statute  is tolled by  a self-concealing wrong,

                                         -33-

          id.,  such that  defendants "'have the  burden of  coming forward
          ___

          with any facts showing that the plaintiff could have discovered .

          . . the cause of action if he had exercised due diligence.'"  Id.
                                                                        ___

          (quoting  Hobson v.  Wilson, 737  F.2d 1,  35, (D.C.  Cir. 1984),
                    ______     ______

          cert. denied, 470 U.S. 1084 (1985)).  Even placing this burden on
          ____________

          Appellees, Appellants' complaint  will nonetheless be  defeated. 

          Appellants   were  provided  with  sufficient  information  which

          reveals, or at a minimum suggests, the possibility of the alleged

          violations.  

                    In the alternative, Appellants argue that, even if some

          standard of  reasonable diligence were applied,  a district court

          must take into account the traditional factors used  in assessing

          reasonable diligence before summary judgment is granted.  Maggio,
                                                                    ______

          824 F.2d at 128; Cook,  573 F.2d at 697.  While we agree that the
                           ____

          traditional and  "more subjective" factors are  to be considered,

          we disagree that they  should affect the outcome of  this appeal.

          Stressing  the  subjective nature  of the  "reasonable diligence"

          test,  Appellants   essentially  argue  that  they   acted  in  a

          reasonably diligent manner in  light of their unsophistication as

          investors and their reliance on Appellees as their fiduciaries. 

                    We remind Appellants  that, although subjective factors

          are  taken into  account, "the  exercise of  reasonable diligence

          requires  an investor  to  be reasonably  cognizant of  financial

          developments relating to  [their] investment,  and mandates  that

          early  steps be taken  to appraise those facts  which come to the

          investor's attention."   Cook, 573  F.2d at 698.   Even  assuming
                                   ____

                                         -34-

          that  Appellees owed  Appellants  a fiduciary  duty, an  investor

          "must 'apply  his common sense to the facts that are given to him

          [or  her]'  in  determining  whether   further  investigation  is

          needed."  Id.  (quoting Cook, 573  F.2d at 696  n.24).  While  we
                    ___           ____

          recognize, and  are genuinely  troubled by, the  possibility that

          the  Participants were  such unsophisticated investors  that they

          were not in a position to heed the storm warnings, the stark fact

          remains that "it was [their] conduct, in accepting the fraudulent

          misrepresentations  and  omissions  as  true,  that  allowed  the

          fraud."  Kennedy, 814 F.2d at 803.  This is what does them in.
                   _______

                    As to the opportunity to discover the misleading nature

          of  Hegenbart's representations  and  the monthly  statements, it

          could not  have presented  itself more  readily.  The  misleading

          information  was  directly  refuted  by  the  plain text  of  the

          prospectuses and  simple arithmetic of the numbers on the monthly

          statements.   Both Hegenbart's representations about  the limited

          partnerships and the prospectuses'  risk disclosures could not be

          true.   Logically,  one  or  the  other  must  have  been  false.

          Similarly,  while the  monthly  statements may  have presented  a

          misleading "big  picture," comparing  two numbers (albeit  on two

          different pages) on the May 1986 statement revealed a significant

          discrepancy  in  the bond  swap figures.    A minimal  attempt to

          resolve  these contradictions  -- for  example, asking  Ben-Meir,

          Hegenbart or  McHugh for an  explanation or a  more comprehensive

          accounting -- should have  uncovered the fraud or, at  a minimum,

          prompted Appellants to abandon (as Ben-Meir strongly  recommended

                                         -35-

          in 1988)  their apparent "laissez-faire" approach.   Kennedy, 814
                                                               _______

          F.2d at  803 (noting that  any attempt to  resolve contradictions

          between  oral misrepresentations  and offering  memorandum should

          have uncovered the fraud or dissuaded plaintiffs from the folly).

                    Nor  can the  subsequent  actions of  the parties  help

          Appellants'  case.   Instead  of  making  a  minimal  inquiry  or

          otherwise  attempting to  resolve the  contradictions, Appellants

          did  absolutely nothing.   Even assuming that  Appellants did not

          see the first storm warnings, "there were yet more dark clouds on

          the horizon."  Maggio, 824 F.2d at 128.  We  find that Ben-Meir's
                         ______

          letter  of October 17, 1988,  and Justman's 1990-1992 arbitration

          proceedings  (which produced  documents  regarding the  excessive

          commissions) should  have brought Appellants to  attention.  Even

          commencing this action in October  of 1988, Appellants still  had

          until June of  1991 to  bring suit for  violations in  connection

          with the first limited partnership interest (purchased in June of

          1985)  and until September of  1991 for the  second (purchased in

          September  of 1985).  Even  starting after October  of 1991, they

          still  had until June of  1993 for the  third limited partnership

          interest (purchased  in June of 1987) and,  until May of 1992 for

          the bond swap  and the  commissions.  Appellants  would not  have

          been  time-barred on  any  of their  actions  had they  acted  in

          October of 1988 upon the information before them.

                    In light  of the  foregoing, we  believe  that in  this

          situation  even unsophisticated  investors,  such  as  Appellants

          here,  should  have sought  to learn  more  about the  nature and

                                         -36-

          content of the  Plan's management.   We believe that  Appellants'

          prolonged failure  to investigate  the possibility  of fraudulent

          conduct in light  of the  multiple storm warnings  can hardly  be

          characterized  as reasonable diligence.   Unsophisticated or not,

          plaintiffs cannot  shroud themselves in ignorance  or expect that

          their unsophistication  will  thoroughly  excuse  their  lack  of

          diligence  or  failure,  here,   to  even  inquire.     To  allow

          unsophisticated investors to remain  utterly ignorant in the face

          of multiple  warnings would render meaningless  the due diligence

          requirement.  Requiring  due diligence  encourages plaintiffs  to

          take  action to  bring the  alleged fraud  to light,  grants some

          sense  of  repose  to   defendants,  and  assures  that  evidence

          presented on the  claim will  be fresh.   Brumbaugh v.  Princeton
                                                    _________     _________

          Partners,  985 F.2d 157, 162 (4th Cir. 1993) (stating that merely
          ________

          bringing  suit after  the  scheme has  been  laid bare  does  not

          satisfy the due diligence requirement when  there have been prior

          warnings that something was amiss).  

                    Lastly,  Appellants  argue   that  because   reasonable

          diligence is factually based, it should not ordinarily be decided

          on  summary judgment.   Cook, 573  F.2d at  697.   However, "even
                                  ____

          assuming the question of reasonable diligence is ordinarily to be

          decided by the trier of fact, where no conflicting inferences can

          be  drawn from the  testimony an appeals  court may make  its own

          determination."  Id.; see  Sleeper v. Kidder, Peabody &  Co., 480
                           ___  ___  _______    ______________________

          F. Supp. 1264,  1266 (D.  Mass. 1979) (noting  that although  the

          issue of  reasonable  diligence is  factually  based, it  may  be

                                         -37-

          determined  as a  matter of  law where  the underlying  facts are

          admitted or  established without  dispute), aff'd mem.,  627 F.2d
                                                      __________

          1088  (1st Cir. 1980).  Here, the district court properly granted

          summary judgment  because  there  is nothing  on  the  record  to

          support an inference that Appellants were reasonably diligent. 

                                   III.  CONCLUSION
                                   III.  CONCLUSION

                    For the foregoing reasons,  the district court's  grant

          of summary judgment is affirmed.
                                 affirmed
                                 ________

                                         -38-