People of the State of New York v. Greenberg

Case Updates

Previously, the New York Supreme Court - Appellate Division ruled that federal securities laws do not preempt the Martin Act claims in this case.

The New York Court of Appeals denied Greenberg's motion for summary judgement and ruled that the Attorney General may proceed to trial seeking equitable relief. The Martin Act gives the Attorney General authority to seek a permanent injunction.

NCLC urged the New York Court of Appeals to reverse a decision of the New York Supreme Court denying the defendant's motion for summary judgment on an action brought by the New York attorney general under the Martin Act. In its brief, NCLC argued that the Securities Litigation Uniform Standards Act (SLUSA), which Congress passed to harmonize securities laws and move securities class actions from state to federal courts, preempts the New York Attorney General’s “class-action-in-disguise” brought under the New York Martin Act. Additionally, NCLC argued that allowing this suit to continue conflicts with Congress's purpose of creating a uniform federal scheme to govern the recovery of private damages for securities fraud. Moreover, New York is the Nation’s and the world’s preeminent financial center. By subjecting businesses and individuals to huge monetary liability under variable and uncertain state-law standards for violations of securities laws, the theory adopted by the NYAG, if accepted, would inhibit capital investment, impose enormous compliance costs on market participants, and discourage public companies from issuing securities here in the United States. These effects will have significant adverse consequences on economic development in New York, where the financial services sector is a critically important generator of jobs and other economic activity.

Previously, NCLC urged the New York Supreme Court - Appellate Division.