New York expands key consumer protection law aimed at financial fraud

State Sen. Michael Gianaris sponsored the bill restoring a six-year statute of limitations under the Martin Act. AP Photo.

By David Brand

A new state law will make it easier for the state to investigate and prosecute financial fraud related to shady stocks, bonds and security transactions

The law, signed by Gov. Andrew Cuomo, restores a six-year statute of limitations for financial fraud under the Martin Act, a 1920s law that gives the state attorney general broad power to investigate allegations of investment fraud. The Court of Appeals had reduced the statute of limitations to only three years in a 2018 ruling. 

Cuomo said the new law would help counteract the erosion of consumer financial protections under President Donald Trump.

“We are enhancing one of the state's most powerful tools to prosecute financial fraud so we can hold more bad actors accountable, protect investors and achieve a fairer New York for all,” Cuomo said.

State Sen. Michael Gianaris, who sponsored the bill in the state Senate, said the Martin Act is “an invaluable tool for enforcement against financial crimes” and called the Court of Appeals’ ruling that weakened the law “misguided.” 

“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,” Gianaris said in a statement.

State Attorney General Letitia James welcomed the measure, which will give her office more power to prosecute corporate greed.

“If Main Street has to play by a set of rules, then so must Wall Street,” James said. “As the federal government continues to abdicate its role of protecting investors and consumers, this law is particularly important.”