Jim Copland: Congress should override NY’s Martin Act

Especially given the role of the Constitution’s Commerce Clause, federalism provides no good reason why successive holders of the office of New York attorney general, through the state’s ultra-broad Martin Act, should regulate national business practices in ways at odds with federal regulation and the wishes of the other 49 states:

national financial markets have been overseen since the Depression by the SEC under federal law. In 1996 Congress enacted the National Securities Improvement Act to exempt nationally traded securities from state registration and review requirements. Congress should go further and pre-empt state securities laws that seek to require disclosures exceeding federal standards or that have looser proof requirements on questions like intent.

[Jim Copland, WSJ ($) via Manhattan Institute; earlier on Martin Act]


  • It will only work if the override explicitly strips State and local prosecutors of absolute immunity. Otherwise, as demonstrated elsewhere, the locals will prosecute and the Federal Law could only be invoked as an affirmative defense. By which time a business might have been stripped of all of its records and computers.

    This is precisely how New York treats the Federal Firearms Owners’ Protection Act.

  • I’ve been tilting at this windmill for a long, long time. See, e.g., McTamaney, New York’s Martin Act: Preemption Delayed Is Justice Denied; Washington Legal Foundation March 25, 2011. Cert was denied in the Greenberg/AIG case, presumably because it was not yet a final judgment, but someday someone will get this awful law to SCOTUS, and that will be the end of it. The Martin Act is probably the single most preempted law in the history of American jurisprudence.