BALCONY Supports Legislation to Extend Martin Act, Allow Investors to Take on Corporate Fraud at State Level

NEW YORK, NY (06/07/2010)(readMedia)-- BALCONY,? ?the Business and Labor Coalition of New York,? ?today? (Monday) ?announced its support of legislation? ?that would give institutional investors the power to bring actions at the state level for damages incurred as a result of corporate violations of the Martin Act.

The Martin Act, established in 1921, gives sweeping powers to the state's attorney general to prosecute financial fraud but does not give private or institutional investors any right of action when state securities laws are violated. Additionally,? ?while the Federal class action statute for securities fraud permits State court suits for large pension funds,? ?New York State law does not give Martin Act standing to those pension funds.

Alan Lubin, Co-Chair of BALCONY, argued that this catch-22 has left large institutional investors, like public pension funds, with no remedy for damages and losses sustained as a result of corporate wrongdoing, "New York State's public pension funds lost nearly $100 billion in value as a result of the recent financial meltdown. This critical legislation would protect union members and their families and ensure that our state's public pension funds are guarded against future corporate fraud."

The bills S.5768 (Schneiderman) and A.8646-A (Brodsky?) ?would amend the Business Corporation Law and the Retirement and Social Security Law to allow investors, including New York State and City pension funds, to bring state level actions for damages resulting from corporate violations of the state's securities laws, something they currently can only do at the federal level.

According to Richard Winsten, attorney and Co-Chair of Meyer, Suozzi, English & Klein, P.C.'s Government Relations practice, this legislation is necessary because,"Federal securities laws don't suffice. The SEC missed the whole Madoff scandal despite having it shoved under their noses. New York public pension funds, university endowments, Madoff victims have lost hundreds of millions of dollars but have no effective way to seek restitution This bill, while it cannot restore the losses sustained by so many, is an important step towards protecting the public against future corporate fraud."

BALCONY member Barry Weprin, a partner at Millberg, LLP added, "Passage of the legislation will help to level the playing field between wrongdoers and their victims and protect against fraudulent securities practices. "

New York City Comptroller John C. Liu voiced his support of the bill saying, "New York is one of the few states in the nation that does not currently provide a private right of action for violation of its securities laws. Recent events have amply demonstrated the enormous costs associated with unlawful investment practices. It is clear that public pension funds and other institutional investors need effective legal means to recover such losses from those responsible."

At a May 20th New York City briefing for labor unions on the New York State economy New York State Comptroller Thomas DiNapoli joined Comptroller Liu in expressing his support of the legislation.

BALCONY urges its members and the New York State Legislature to voice their support for this important bill.

BALCONY, the Business and Labor Coalition of New York, represents more than 1,000 New York businesses, labor unions, and trade associations. BALCONY seeks common ground in the public policy debate in New York to spur economic development through the adoption of business/union friendly, socially responsible common sense laws that maintain and improve the quality of life for working New Yorkers.