In 1921, New York enacted the Martin Act, New York's "blue sky" law, to combat fraud in connection with the public sale of securities, and later, real estate offerings.1 The attorney general of New York has exclusive enforcement powers under the act, which include both civil and criminal remedies. The act does not give rise to a private right of action for violations thereof.2
Until recently, New York state and federal courts were split on whether the Martin Act preempts private parties from asserting common law claims for fraudulent securities and investment practices addressed in the statute.3 In December 2011, however, the New York Court of Appeals in Assured Guaranty v. J.P. Morgan Investment Management, finally put this debate to rest, ruling that a plaintiff may maintain common law claims in connection with the sale of securities or real estate offerings, despite the fact that such conduct could also be prosecuted by the attorney general under the Martin Act, provided that the claims would exist absent that statute.4 This article discusses recent Commercial Division decisions that have addressed the impact Assured Guaranty has had on Martin Act preemption defenses.
The Martin Act
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