Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511


S.965 (Libous) / A.6585(Abbate)



Martin Act



April 22, 2013


The Business Council strongly opposes this legislation that would:

In general, we oppose any expansion of the Martin Act. This is one of the strongest – and we believe, unfair - securities laws in the nation, because of its overly broad definition of fraud, low evidentiary standards and expansive investigative authority. Among other things, its definition of fraud is broader than that in common law, federal securities law, or other similar state law, in that it does not require a finding of intent to defraud, just the misrepresentation or omission of a material fact. It also does not require demonstration that an injured party in any way relied on such misstatement or omission in a financial transaction.

Importantly, the Martin Act can be used against any publicly traded company whose securities transactions involve New Yorkers.

For these reasons, expansion of the Martin Act would send a significant adverse message to private sector employers located in, and involved in security trades in, New York State.

Moreover, we have serious concerns with the specific provisions of this bill.

The Business Council has longstanding concerns with the excessively broad criteria for security violations under the Martin Act, and believes at most its provisions need to be reserved to the discretion of elected state officials.

We strongly oppose this new authority granted to pension funds to direct state investigatory activity, and to retroactively impose these new provisions.

Further, the Attorney General has ample authority to investigate and prosecute security law violations, and existing law already provides the restitution of recovered funds to any pension funds that may have been damaged by such violations.

For these reasons, we strongly oppose approval of this inappropriate, unnecessary legislation.