Long dormant, the Martin Act was famously dusted off and put to vigorous use by former New York Attorney General (later governor, now CNN television pundit) Eliot Spitzer in his campaign to clean up Wall Street. The Martin Act, New York’s “blue sky” law, prohibits “fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale” in the distribution, exchange, sale and purchase of securities.1
Originally enacted in 1921 to allow the attorney general to intervene to prevent imminent frauds in the investment securities market,2 the Martin Act was at first quite anemic, limiting the attorney general’s enforcement power to enjoining fraudulent behavior.3 Over the years, the Martin Act was made more robust; it was amended in 1955 to give the attorney general authority to institute proceedings without having to demonstrate all the elements of ordinary civil fraud claims, particularly fraudulent intent and reliance.4
