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Consumer Victory In New York Appellate Court Decision

By Tom Frost of Shustak Reynolds & Partners, P.C. posted on Tuesday, December 20, 2011.

The New York Court of Appeals handed a significant consumer victory to investors and current Attorney General Eric T. Schneiderman in its December 20, 2011 ruling in Assured Guaranty (UK) Ltd., v. JP Morgan Investment Management, Inc. The Court’s decision decided the frequently litigated question of whether New York’s Martin Act (General Business Law Art. 23A, Sections 352-359 (2011) preempts securities-related, non-fraud common law causes of action.

Mr. Schneiderman maintained that permitting private actions would not undercut his enforcement powers, as argued by the defendant, but on the contrary would assist him in preventing securities-related fraud. The Court of Appeals agreed.

Under the 6-0 opinion by Judge Victoria A. Graffeo, the Court said law and public policy support its conclusion that “an injured investor may bring a common-law claim (for fraud or otherwise) that is not entirely dependent on the Martin Act for its viability. Mere overlap between the common law and the Martin Act is not enough to extinguish common-law remedies.”

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