NY Law Journal: Governor Signs Bill Reinstating 6-year Statute of Limitations Under Martin Act

The new law reverses a decision last year from the New York Court of Appeals, the state’s highest court, which interpreted the law to have a three-year statute of limitations. While those cases are typically considered a priority for the office, last year’s decision placed a first-time limit on how they’re pursued.

Enter New York Attorney General Letitia James, who referred a bill to state lawmakers earlier this year to reinstate the six-year statute of limitations. That’s called a program bill, which is when a statewide official proposes a change in law to the Legislature.

“If Main Street has to play by a set of rules, then so must Wall Street,” James said. “This law strengthens two of our most critical tools in holding corporate greed accountable and delivering justice for victims of financial fraud.”

Despite the complexity of the securities fraud litigation brought under the Martin Act, the measure is relatively straightforward.

The law adds a new subdivision to a section of the state’s civil practice law that allows actions brought under the Martin Act to be pursued within six years of an alleged violation. The change also applies to Executive Law 63(12), a part of the state’s law that allows the Attorney General’s Office to seek restitution or damages in cases of persistent fraud.

The bill was carried in the Legislature by Assemblyman Rober Carroll, D-Brooklyn, and state Sen. Michael Gianaris, D-Queens. Both lawmakers worked with James to move the bill before this year’s legislative session ended in June.

“The Martin Act has become an invaluable tool for enforcement against financial crimes and unfortunately a misguided court decision made it harder to use that tool,” Gianaris said. “We wanted to go back to the way it was originally used and allow the state the maximum time possible to go after wrongdoing in the financial services industry.”

The Martin Act, which was first approved by the Legislature nearly a century ago, was sparsely used to pursue financial crimes on Wall Street until two decades ago, when Eliot Spitzer took office as state attorney general under former Gov. George Pataki. Spitzer would later go on to become the state’s governor.

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