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LRANY Announces 2015 Schedule of Events

The Lawsuit Reform Alliance of New York is excited to announce our 2015 schedule of events.  For the first time, LRANY will be holding multiple educational and informational events throughout the year and across the state. These events will appeal to broad audiences. Both members and non-members alike are welcome to attend pending space limitations.

The events schedule is as follows:

The Daubert Dilemma, Cutting Edge Science and Law in the 21st Century
New York City | April 29, 2015

Asbestos Litigation, Business as Usual in a “Judicial Hellhole”
New York City | June 2015

LRANY Fall Meeting, Will the Plaintiffs’ Bar Pull the Sword from the Stone?
Westchester | September 2015

LRANY Annual Meeting & Key Issue Summit
Saratoga | Fall 2015

More information on all of these events is available at our events page here.

Sponsorship opportunities are available for all of our events, see our 2015 Sponsorship Opportunities here

LRANY Video Series: New York’s “Martin Act”

This week, to continue the LRANY Video Series, Tom Stebbins discussed New York’s “Martin Act.”

The Martin Act was established in Albany in 1921, it granted the Attorney General broad powers to investigate and pursue alleged wrongdoing associated with the purchase and sale of securities. The Martin Act is one of the toughest securities laws in the nation as these powers of the AG are so extraordinary that this act does not require any elements of proof.
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LRANY Video Series: Funding Political Campaigns with the ‘Martin Act’

This week, to continue the LRANY video series, we bring you a video on funding political campaigns with recovery’s from the ‘Martin Act’.  The Martin Act, established in Albany in 1921, grants the Attorney General broad powers to investigate and pursue alleged wrongdoing associated with the purchase and sale of securities.  It is one of the toughest securities laws in the nation as these powers of the AG are so extraordinary that this act does not require any elements of proof.

Recent actions in our legislature look to using funds retrieved from prosecutions under the ‘Martin Act’ to fund political campaigns.  This dangerous regulation would creates a clear conflict of interest incentivizing filing lawsuits to collect election funds.

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Court of Appeals was Right to Ban Private Martin Act Suits

A recent article in the New York Daily News illuminates the potential issues raised by giving the broad powers of the Martin Act to private attorneys, as well as the potential for a new wave of private non-fraud securities suits. From the article:

“Empowering plaintiffs to wield that extraordinarily potent law would have been a bonanza for trial lawyers and plaintiffs — and a disaster for the rest of New York’s economy.”

We couldn’t agree more.

Read the full article here:

Court Of Appeals Decision: Martin Act Does Not Bar Common Law Claims

 By: Scott Hobson

A recent 6-0 ruling in the case of Assured Guaranty v. J.P. Morgan by the New York Court of Appeals held that the nearly century-old Martin Act does not preclude private investors from pursuing claims in common law.

The decision overturned a January 2011 ruling by a Manhattan federal court judge which held that the Martin Act preempted common law claims. The Court of Appeals’ unanimous decision noted that the Martin Act, while empowering the Attorney General, “does not expressly mention or otherwise contemplate the elimination of common-law claims.” The decision received support from current Attorney General Eric Schneiderman, who indicated that the recognition of private lawsuits would help his office in its public enforcement role.

The decision did not, however, allow private actions under the provisions of Martin Act. Nonetheless, Assemblyman Rory Lancman (D, Queens) is using this case as an opportunity to promote his own legislation which would, disastrously, extend the Attorney General’s power under the Martin Act to private attorneys. Quoted in a New York Law Journal article, Lancman said,

“I read the decision as an invitation to the Legislature to expand the Martin Act itself and allow investors to recoup losses as a result of fraud or malfeasance the Court of Appeals is not immune to the economic and legal reality that most people defrauded on Wall Street these days just have to suck it up and move on because the federal securities laws have been so constricted over the past 20 years.”

Assemblyman Lancman’s proposal has troubling implications, in addition to the glaring conflict of interest from his outside work as a trial lawyer. The Martin Act is indisputably the strongest securities fraud statute in the nation and is unique to New York. Under the law, the Attorney General is empowered to file lawsuits against any public corporation or associated party for absolutely any act or omission which could be construed to “mislead” investors – no matter how insignificant. As the law is written, a mere typographical error in a funding prospectus could give rise to a suit.

In stark contrast to lawsuits in common law, Martin Act lawsuits do not require the  Attorney General to prove that any investor actually relied on the allegedly misleading information or suffered any damages. In fact, the current statute does not even require that the Attorney General prove deliberate fraud.

Mr. Lancman insists that this virtually unlimited power should be given to private attorneys. Consider for a moment, the implications of such a proposal. Currently, the Martin Act’s powers are entrusted solely to the Attorney General, who is elected by the people of New York and is publicly accountable for his actions. Private attorneys, motivated by profit, have no accountability and no duty to the people of the state. Far from protecting investors, Lancman’s proposed legislation would instead give rise to a new breed of jackpot securities lawsuits and trigger a feeding frenzy which could threaten the viability of an entire industry.

Given that this recent Court of Appeals decision now gives private investors a cause of action through common law, Lancman’s proposal to expand the Martin Act is as unnecessary as it is reckless.

The extraordinary powers of New York’s AG

The Martin Act was established in Albany in 1921, it granted the Attorney General broad powers to investigate and pursue alleged wrongdoing associated with the purchase and sale of securities.  The Martin Act is one of the toughest securities laws in the nation as these powers of the AG are so extraordinary that this act does not require any elements of proof.  We have recently seen this power being executed by the past two Attorney Generals and currently being used by Eric Schneiderman in a vast attempt to rid securities companies of fraud.

A recent NY Post Article states: ” Business leaders are fuming over Attorney General Eric Schneiderman’s nervy use of the Martin Act, the state law that gives him super-broad powers to investigate and press charges against alleged financial fraud. For example, Schneiderman has gone after several large energy firms for allegedly over-optimistic financial comments on upstate gas “fracking,” a charge conveniently aligned with his own anti-fracking stance. Recently he used the act in an attempt to upset a settlement deal between bankers and the feds over mortgage misdeeds — critics charge him with “blindsiding” the Bank of New York Mellon with what BNYM calls “outrageous” and “baseless” fraud charges.”

Currently, only the Attorney General benefits from such a permissive standard of proof in securities fraud.  However there is a bill circulating which would pass these powers along to private attorneys.  This action would be devastating for New York’s economy, causing a rush of lawsuits being filed against large companies by attorneys looking for a pay day.

LRANY fought against this legislation last session and was able to persuade multiple co-sponsors to remove themselves from the bill.

We will continue this fight in the upcoming 2012 session!