On August 26, 2019, New York Governor Andrew Cuomo signed into law legislation extending the statute of limitations for claims brought under the Martin Act from three to six years.
The statute reverses a New York Court of Appeals decision holding that Martin Act claims must be brought within three years.
The Martin Act
The Martin Act is one of the country’s most widely used and powerful “blue sky” laws. It “authorizes the Attorney General to investigate and enjoin fraudulent practices in the marketing of stocks, bonds and other securities within or from New York State” and grants the Attorney General “broad authority to investigate, to secure a permanent injunction against any person or entity that has engaged in fraudulent practices and to obtain restitution of money or property wrongfully obtained.” In addition—and in contrast to common law fraud claims—the Attorney General does not need to show scienter, intentional fraud, or reliance in order to state a claim under the Martin Act.
Nearly a century old, the Martin Act was primarily used to police Ponzi schemes and other smaller-scale frauds. But New York prosecutors, starting with Eliot Spitzer, have transformed the Martin Act in recent years into a powerful tool of broad application, leveraging it to collect billions from financial institutions and even to address climate change and investigate the cryptocurrency market.
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