Judge in Keating Trial Answers Jury’s Question

The judge presiding over the securities-fraud trial of Charles H. Keating Jr. told jurors Monday that certain small investors in Keating’s company had to exercise “reasonable diligence” to discover misleading or important missing information about bonds they bought.

Superior Court Judge Lance A. Ito, responding to a question from jurors, indicated that such diligence applied only to transactions that occurred before Sept. 13, 1987--beyond the three-year statute of limitations period.

Five of 18 criminal counts against Keating contain allegations about sales of American Continental Corp. bonds before the 1987 date. Those bond sales could be used against Keating only if the bondholders, using reasonable diligence, couldn’t have discovered any fraud during the three-year period for which Keating is liable.

The judge’s answer came at the start of the ninth day of deliberations.