BALCONY Member: "Pass Martin Act Accountability Extensions"

NEW YORK, NY (03/15/2012)(readMedia)-- New York's 90-year-old Martin Act, which gives the state's Attorney General sweeping powers to prosecute financial fraud, needs to be amended to reflect modern financial reality.

It simply has not kept up with the times - i.e., the deregulation of financial services and the ensuing carnage it has caused for working New Yorkers.

As the new legislative session approaches, it's time for our Albany lawmakers to level the playing field and pass bills that would give institutional investors the ability to recover damages caused by violations of financial regulations.

It's the right thing to do and it will help bring accountability to Wall Street.

The bills, sponsored by Democratic Assemblyman Rory Lancman of Queens and Republican State Senator Thomas Libous of Binghamton, would allow pension funds, including the New York State and City pension funds, to hold securities professionals accountable for violating the Martin Act.

State Attorney General Eric Schneiderman, who sponsored a similar bill while in the State Senate, and the two attorneys general before him, have done a fine job going after fraudsters.

Now it's time to let the pension funds go after the wrongdoers as well.

As Lancman wrote in an op-ed for Bloomberg News in May, "As Congress and the federal courts impose increasingly stringent substantive and procedural limitations on holding wrongdoers in our securities markets accountable, New York urgently needs to give its investors - particularly its public and union employee pension funds - the means to bring claims of their own, to recover some of their tens of billions of dollars in losses and to identify those who caused those losses."

We at BALCONY, the Business and Labor Coalition of New York, couldn't agree more. We are encouraged that Lancman intends to pursue his bill, which would enable pension funds to protect their rights under the Martin Act - something Wall Street opposes ferociously.

In a positive development, New York's Court of Appeals recently ruled that the Martin Act does not prevent investors from asserting "common law claims" against securities professionals. That's good as far as it goes, but it does not go far enough.

New York State's public pension funds lost nearly $100 billion in asset value as a result of the financial meltdown over the last couple of years. The proposed legislation would protect union members and their families and ensure that our public pension money is guarded against future corporate greed.

It's all well and good that financial scammers are going off to jail in record numbers and that some investors may recoup a fraction of their losses through the courts.

These bills - which have the support of State Comptroller Thomas DiNapoli and City Comptroller John Liu - will not help New Yorkers go after convicted rip-off artists like Bernie Madoff, but they will help protect the pension funds from the next wave of financial hucksters.

Andrew Pallotta is Executive Vice President of the New York State United Teachers and a Business and Labor Coalition of New York Member. www.BalconyNewYork.com