These bills create new public campaign funding systems for all state wide and state legislative elections.
Regardless of general concerns about public financing of campaigns, The Business Council strongly opposes the provision in this bill that would generate revenues through new surcharges on penalties and settlements under Article 23-A of the General Business Law, commonly referred to as the Martin Act.
The Martin Act is one of the most lopsided securities laws in the nation because of its excessively broad definition of fraud, low evidentiary standards and expansive investigative authority granted to the Office of Attorney General. Among other things, its definition of fraud is far broader than that in common law, federal securities law, or other similar state laws, in that it does not require a finding "scienter," or intent to defraud, just the misrepresentation or omission of a material fact. Nor does it require evidence that any entity that purchased a security in fact relied on such misrepresentation or omission.
Due to its inappropriate, unfair standards, The Business Council opposes any expansion of the Martin Act, including an expansion of its financial penalties or settlement provisions.
In addition, The Business Council believes it is inappropriate to make the funding of these or any other spending programs contingent on the level of enforcement income generated by the state. Civil and criminal penalties should be based on the nature and degree of a violation. Tying the funding of spending programs to civil or criminal penalties creates a perverse incentive to pursue inappropriate cases and excessive settlements.
If the legislature seeks to create new spending programs, for campaigns or other purposes, they should accommodate any new costs within current budget parameters.
It absolutely should avoid making appropriations based on penalty income.
For this reason, The Business Council opposes consideration of A.4980 / S.4705 in its current format.