The New York Court of Appeals has given a holiday gift to New York securities plaintiffs: yesterday, the court handed down its decision in Assured Guaranty (UK) Ltd. v. J.P. Morgan Investment Management Inc., 2011 NY Slip Op 09162, New York Supreme Index Number 603755/2008 (available at http://www.courts.state.ny.us/ CTAPPS/Decisions/2011/Dec11/227opn11.pdf), at long last determining that New York's Martin Act does not preclude private plaintiffs from pursuing common law claims such as fraud and negligent misrepresentation related to securities transactions. Until now, the court had not spoken on the issue.
The Martin Act, New York State's "blue sky" law, N.Y. Gen. Bus. Law, Art. 23-A, § 352 et seq. (McKinney 1996), was enacted in 1921 to protect New York investors from fraud in the offer and sale of securities. Since then, the Act has been strengthened by the Legislature and has been interpreted broadly, making it an extremely powerful weapon in the hands of the state attorney general. During his tenure as New York Attorney General, Eliot Spitzer resurrected the until then fairly dormant Martin Act, using its broad regulatory and damages...
