This week New York legislatively circumvented one of the few judicial constraints on New York's Martin Act and Executive Law, restoring a six-year statute of limitations for claims under these broad statutes.

On August 25, New York Governor Andrew Cuomo signed legislation restoring a six-year statute of limitations for the Martin Act and Executive Law 63(12), overriding a 2018 New York Court of Appeals decision establishing a three-year limit. Invoked by a succession of New York Attorneys General to pursue headline-grabbing actions against financial institutions and senior executives, the Martin Act prohibits a variety of "fraudulent practices." But, unlike common law fraud or federal antifraud statutes, it has been interpreted by the Attorney General and some New York courts to not require proof of intent or justifiable reliance. Section 63(12) further bolsters the Attorney General's enforcement authority in fraud cases. Together, the Martin Act and Executive Law 63(12) are among the most powerful financial fraud enforcement tools in the country.

In People v. Credit Suisse Sec. (USA), 31 N.Y.3d 622 (2018), the New York Court of Appeals held that the Martin Act was not a codification of common law, and therefore it was subject to a three-year statute of limitations, not six years. New York Attorney General Letitia James proposed the return to a six-year limitation, and a bill was sponsored by state Assemblyman Robert Carroll and Senator Michael Gianaris.

As we have previously written, the investigative authority of the New York Attorney General is not without its limits. The Martin Act and 63(12), however, give the office broad authority. Although complex fraud cases take time to investigate and develop, the Attorney General could simply invoke the six-year limitations period for a common law fraud claim, but of course that would require proof of such traditional fraud elements as intent, reliance and causation. Statutes of limitation remain an important safeguard against fading witness memories and the loss of important documentary evidence with the passage of time, a concern that is especially important with statutes as uniquely broad as the Martin Act and Executive Law 63(12). The reasonable balance the Court of Appeals sought to impose in its Credit Suisse decision may now be lost in certain cases with New York's restoration of a six-year limitations period.