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The Martin Act

The Martin Act – New York’s Blue Sky Law

The Martin Act, codified at New York General Business Law 352-359(h), is the strictest blue sky law in the United States. Investigation, public humiliation, arrest, severe fines, and imprisonment may follow the New York Attorney General targeting nearly any conduct that could hypothetically be found to be securities fraud.

If you or a loved one or one of your colleagues has been accused of violating the Martin Act, or your firm or business is being investigated by the Attorney General for violating the Martin Act, it is imperative that you secure experienced New York Martin Act lawyers to protect you and your office. Our experienced Martin Act attorneys can help to protect you and your colleagues from criminal penalties, humiliating cross examinations, and the exposure of internal business practices.

Any conduct that could potentially be detrimental to the investing public carries the potential for public and embarrassing hearings where information about the inner workings of financial institutions may be exposed. Criminal intent need not even be proven or shown for the less serious charges brought under the Martin Act. The Martin Act empowers the Attorney General to essentially shut down a financial institution’s business through the power of injunctions during the long and punitive investigative process. Since the investigative process is punitive, conviction does not even need to occur for State of New York to severely harm your business and reputation.

The acts that are prohibited by the Martin Act are listed at New York General Business Law 352-c. The Martin act forbids any of the following acts done in the furtherance of a sale or some other transaction relating to securities or commodities:

  1. Lies and misstatements, or bogus sales.
  2. Any statement which makes promises about the future that are unreasonable under the current facts or are highly unlikely to come to pass;
  3. Any declaration that is false, where the defendant either knew or could have known what was actually true, didn’t bother to find out what was actually true, didn’t attempt to find out what was true, or didn’t have any knowledge about the truth of the statement made.
  4. Entering into any lie, con, deception, or any of the conduct listed above for the purpose of gaining money or property.
  5. It is prohibited for any business that is not registered with the SEC or selected as a contract market by the CFTC to sell securities or commodities.
  6. Purposefully scheming and entering into a plan with the intent to con more than 10 people.

The most humiliating provision of the Martin act is the portion of GBL 352 that grants the Attorney General subpoena power to compel the attendance and testimony of witnesses before a magistrate or court, and compel the production of documents, digital records, and receipts that the Attorney General believes are relevant to the inquiry. This provision punishes businesses without even convicting them. The punishment is the process. Witnesses from these businesses are haled before a court and without any sort of real trial, the witnesses are tarred and feathered. The news media can spin such testimony into headlines that can dramatically harm a business. Incredibly, the courts of the state of New York have held that there is no right to counsel during a Martin Act investigation, however, the Attorney General has generally permitted it.

If you or someone with whom you work with has been targeted by the New York State Attorney General for violating the Martin Act call our experienced securities fraud lawyers today. Our blue sky law lawyers may be able to have the charges against you, your co-workers, or your business reduced or dropped. Call our office today for a free consultation.

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