WASHINGTON -- Municipal bond investors face major new hurdles in trying to sue participants in defaulted bond deals as a result of a ruling by the Supreme Court that limits the amount of time plaintiffs have to file securities fraud lawsuits, market observers warned yesterday.

In addition, the high court's decision last week in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson will place pressure on bond trustees to step up disclosure about shaky deals before they go under. The ruling also could cripple millions of dollars of pending investor suits, including litigation against nursing home operator First Humanics Corp., lawyers involved in the case said.

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