In a sign that he wants to appear tough on Wall Street, Manhattan District Attorney Cyrus Vance Jr. said that he will seek harsher penalties, including mandatory prison time, for people convicted of major securities fraud in New York
In a sign that he wants to appear tough on Wall Street, Manhattan District Attorney Cyrus Vance Jr. said that he will seek harsher penalties, including mandatory prison time, for people convicted of major securities fraud in New York.
In a speech at the New York City Bar Association last week, he said that he would call on the state Legislature to change the Martin Act, New York's securities fraud statute, to allow him to impose prison sentences of as long as 81/3 years to 25 years for frauds involving more than $1 million. The law imposes no minimum prison sentence, regardless of the money involved.
“The flexibility of the Martin Act and its utility in the battle against criminal fraud is marred by its overly lenient penalties,” Mr. Vance said in the speech.
The 1921 Martin Act was wielded against investment banks and the mutual fund industry by Eliot L. Spitzer and Andrew Cuomo when each served as state attorney general.
Robert Morgenthau, Mr. Vance's predecessor in the Manhattan DA's office, used the law to prosecute white-collar crime.
Mr. Vance said that he plans to make broader use of the Martin Act in the coming year to prosecute investment frauds and Ponzi schemes involving investment funds, fraud schemes hatched by broker-dealers, the manipulation of commodities and commodity futures, and insider trading in securities and commodities.
He said that he wants penalties to conform to larceny statutes, which distinguish between $1,000, $3,000, $50,000 and $1 million thefts.
SAME PENALTY
A high-level market manipulator who deprives the investing public of hundreds of millions of dollars is subject to the same penalty as a broker who fraudulently deprives one customer of $500, Mr. Vance said.
“In either case, a state court judge would be authorized to impose a non-incarceratory sentence,” he said in the speech.
The Martin Act grants authority to investigate and prosecute, as the state's Court of Appeals stated in 1926, “all deceitful practices contrary to the plain rules of common decency.”
To violate the law, no sale or purchase is necessary if there are lies or deception in the offering of securities. Intent to defraud also isn't required.
Mr. Vance said noted that Manhattan district attorneys have complained about the Martin Act, which in its original form lacked criminal provisions, for many years.
