Search Results for ‘"martin act"’

“Devil’s Bargain: Wall Street and the Martin Act”

My new op-ed at the New York Post looks at the history of Spitzer-to-Cuomo-to-Eric Schneiderman prosecutorial overreach and asks: how exactly did the New York Attorney General come to have so much power with so little constraint? (& welcome Instapundit, Real Clear Markets, Timothy Carney/Examiner, CEI readers)

More: I and others have written about the act here and at Point of Law.

New York’s Martin Act: Spitzer’s blank check

Why is New York Attorney General Eliot Spitzer so feared by the state’s financial community? A major reason is a little-known piece of 1921 New York legislation called the Martin Act, aimed at financial fraud. “It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.

“Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits.” Important reading (Nicholas Thompson, “The sword of Spitzer”, Legal Affairs, May-June). Radley Balko comments (May 12), and see our Jan. 17 item. More on Spitzer’s financial enforcement: Dec. 17, 2003; Jun. 17-18 and Oct. 30-31, 2002; Mar. 31-Apr. 2, 2000.

Another step toward climate speechcrime: New York subpoenas

Months of agitation promoting a government investigation of supposedly wrongful advocacy on the issue of climate change have begun to pay off. As Holman Jenkins [paywall] notes, purportedly levelheaded Democrats and environmentalists are now jumping on the bandwagon for a probe of possible unlawful speech or non-speech by energy companies and advocacy groups they’ve backed. Perhaps the most remarkable name on that list is Hillary Clinton, who said the other day in New Hampshire, referring to Exxon, “There’s a lot of evidence that they misled people.” That’s right: Hillary Clinton, of all people, now wants to make it unlawful for those who engage in public controversy to mislead people.

The first high-profile law enforcer to bite, it seems, will be Eric Schneiderman, whose doings I’ve examined at length lately. “The New York attorney general has launched an investigation into Exxon Mobil to determine whether the country’s largest oil and gas company lied to investors about how global warming could hurt its balance sheets and also hid the risks posed by climate change from the public,” reports U.S. News. Show me the denier, as someone almost said, and I will find you the crime: “The Martin Act is a nearly empty vessel into which the AG can pour virtually any content that he wants,” as Reuters points out. More on the Martin Act here and here.

At Forbes, Daniel Fisher notes the possible origins of the legal action in an environmentalist-litigator confab in 2012 (“Climate Accountability Initiative”) in which participants speculated that getting access to the internal files of energy companies and advocacy groups could be a way to blow up the climate controversy politically. Fisher also notes that Justice Stephen Breyer, in the Nike v. Kasky case dismissed 12 years ago on other grounds, warned that it will tend to chill advocacy both truthful and otherwise by businesses if opponents can seize on disagreements on contentious public issues and run to court with complaints of consumer (or presumably securities) fraud.

Perhaps in this case chilling advocacy is the whole point. And very much related: my colleague Roger Pilon’s post last week, “Whatever Happened to the Left’s Love of Free Speech?“; Robert Samuelson (“The advocates of a probe into Exxon Mobil are essentially proposing that the company be punished for expressing its opinions.”)

Police and prosecution roundup

  • Arkansas: “‘Corruption of Blood’ Amendment Withdrawn After House Supporter Is Reminded What Century It Is” [Above the Law]
  • George Zimmerman-Trayvon Martin case heads for trial [TalkLeft, Doug Mataconis, and Richard Hornsby via Megan McArdle on evidentiary standards, earlier]
  • Is New Hampshire citizens’ group harassing town parking meter enforcers, or monitoring their work? [Union Leader, ABA Journal, Reason]
  • New York politicos quarrel over Hank Greenberg suit, overbroad Martin Act is to blame [Bainbridge]
  • Enforcement grabs higher-ups in Ralph Lauren Argentine customs bribery case [FCPA Professor, earlier]
  • Who stole the tarts? “Mom has son arrested for stealing Pop-Tarts” [Lowering the Bar; Charlotte, N.C.] Tip from Georgia cops: avoid situations where you might have to cling to hood of moving car [same]
  • “Omaha officers told: Don’t interfere with citizens’ right to record police activity” [Omaha World-Herald via @radleybalko (“Good work, Omaha.”)]

Spitzer vs. the SEC

Mike O’Sullivan at Corp Law Blog says he’s not so sure it’s a bad thing for the SEC to have a reputation as “legalistic” rather than creative in its approach to fighting market misconduct: “The SEC has a great deal of authority over the U.S. capital markets. If the SEC does not act within the four corners of the law, the SEC would inject a great deal of uncertainty into the capital markets. …

“This is one of the reasons why I think it’s inappropriate to compare the SEC to Eliot Spitzer’s operation. Spitzer feels free to use New York’s Martin Act to attack anything that strikes him as abusive, regardless of whether it’s clearly illegal. The SEC has in its arsenal nothing as open-ended as the Martin Act, and that’s a good thing for US markets. The Martin Act is, as one commentator called it (PDF), a ‘fierce sword’ of uncertainty, permitting prosecutors to stretch the definition of crimes and then engage in extensive discovery to compel their targets to capitulate. This makes the Martin Act a very useful tool for a prosecutor looking to make his mark, and a nearly useless guide to a person looking to avoid becoming the target of a prosecutor looking to make his mark.

“Beyond creating uncertainty, another interesting consequence of open-ended criminal statutes like the Martin Act is the freedom they give prosecutors to legislate on the fly.” (Dec. 29). Plus: welcome National Law Journal readers (Andrew Harris, “Waging war against Wall St. corruption”, NLJ, Dec. 22, not online, quotes me suggesting that Spitzer is “imposing a different regulatory scheme nationwide than the one imposed by the federal government,” not necessarily a good idea given that he isn’t answerable to a nationwide electorate).