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WBK Industry News - State Regulatory Developments

New York Restores Statute of Limitations Under Martin Act to Six Years

On August 26, 2019, New York Governor Andrew Cuomo signed into law a bill that, effective immediately, restores the statute of limitations for financial fraud claims brought under the Martin Act to six years.  This bill undoes a 2018 ruling by the New York Court of Appeals that held that such claims under the Martin Act were subject to a three-year statute of limitations.

Governor Cuomo stated in a press release that “[b]y restoring the six-year statute of limitations under the Martin Act, we are enhancing one of the state’s most powerful tools to prosecute financial fraud so we can hold more bad actors accountable, protect investors and achieve a fairer New York for all.”

The Martin Act applies to the offer, sale, or purchase of securities and commodities within or from New York, and includes real estate offerings involving condominiums and cooperative apartments.  Note that the Martin Act authorizes the New York Attorney General to conduct investigations of securities fraud and bring claims against alleged violators.

In June 2018, in connection with a case involving alleged violations of the Martin Act, the New York Court of Appeals held that a three-year statute of limitations applied to claims under the Martin Act and rejected the New York Attorney General’s argument that a six-year statute of limitations applied to such claims.