Governor Signs Legislation to Bolster Martin Act

Governor Cuomo signed legislation (S.6536/A.8318) restoring the six-year statute of limitations under the Martin Act. The Martin Act gives the New York Attorney General broad powers to investigate and bring civil or criminal actions for fraudulent securities practices. Unlike the requirements for a plaintiff proving fraud under New York common law, the Attorney General does not need to prove scienter or reliance (intent to defraud or a justifiable dependence on another’s representation) in a civil action under the Martin Act. Instead the Attorney General must prove only: a false or misleading statement or omission that was material and made in connection with issuance, distribution, exchange, sale, negotiation or purchase of securities or commodities within or from New York State.

Previously, the Martin Act was applied with a six-year statute of limitations, however, in 2018 the Court of Appeals held that claims by the New York Attorney General for fraud under the Martin Act, are subject to a three-year statute of limitations for statutory claims, because the Martin Act imposes liabilities that “did not exist at common law.”

Governor Cuomo said:

“At a time when the Trump administration is hell-bent on rolling back consumer financial protections, New York remains dedicated to preventing and prosecuting fraudulent financial activity. By restoring the six-year statute of limitations under the Martin Act, we are enhancing one of the state’s most powerful tools to prosecute financial fraud so we can hold more bad actors accountable, protect investors and achieve a fairer New York for all.”

Attorney General James said:

“If Main Street has to play by a set of rules, then so must Wall Street. This law strengthens two of our most critical tools in holding corporate greed accountable and delivering justice for victims of financial fraud. As the federal government continues to abdicate its role of protecting investors and consumers, this law is particularly important. New York remains committed to finding and prosecuting the bad actors that rob victims and destabilize markets. I thank the bill’s sponsors, Senator Gianaris and Assembly Member Carroll, legislative leaders, and Governor Cuomo for helping to make this important bill the law of the land.”