For understandable reasons, the Trayvon Martin saga has dominated the news since a Florida jury rendered its verdict Saturday. But there’s another Martin case New Yorkers would do well to pay attention to.
It’s called the Martin Act, and its future ought to be part of our election debate.
Exhibit A is Eliot Spitzer, now running for city comptroller. Forget about the call girls. What New Yorkers really ought to be looking at from his past is the way he went after businesses as attorney general.
Spitzer’s M.O. was as follows: Demand internal company documents, leak selected parts to the press and then present the company with an ultimatum — settle with Eliot, or face the financial and reputational costs of criminal and/or civil litigation.
That’s an outrageous way for an officer sworn to uphold the rule of law to behave, and it helps explain why New York has one of the nation’s least friendly business environments. It was possible only because of an archaic state law — the Martin Act. Under this statute, to go after someone for financial fraud, an attorney general doesn’t have to prove that his target intended fraud or in fact defrauded anyone.
In other words, it’s an invitation to abuse of power. In The Wall Street Journal this week, Gordon Crovitz noted just one of the consequences: After Spitzer forced investment banks to dump their research departments, “the result was a steep decline in Wall Street analysis of public companies.”
Spitzer’s no longer attorney general, but his example lives on. Eric Schneiderman has used the Martin Act to go after energy companies that want to frack. And he just announced a “victory” in a hedge-fund case which will likely mean that funding for important consumer research dries up.
When the Martin Act was passed in 1921, it was aimed at small-time hucksters. If New York wants to keep business competitive in a global economy, we might start by repealing an outdated law that does less to clean up the corporate environment than it does to fuel the ambitions of our highly politicized attorneys general.