“A little-known law called the Martin Act gives New York’s attorney general extraordinary power, yet for 75 years this Excalibur has been left to rust in its scabbard. Now, Eliot Spitzer is wielding it against the biggest players on Wall Street. Should such a powerful weapon be left in anyone’s hands?
“The purpose of the Martin Act is to arm the New York attorney general to combat financial fraud. It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.
“Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits. ‘It’s the legal equivalent of a weapon of mass destruction,’ said a lawyer at a major New York firm who represents defendants in Martin Act cases (and who didn’t want his name used because he feared retribution by Spitzer). ‘The damage that can be done under the statute is unlimited.’”