New York has been using the Martin Act for over a decade to prosecute financial fraud and improprieties. Given the preeminence of New York City for the financial sector, that makes current Attorney General Eric Schneiderman one of the most powerful, and feared, people on Wall Street.
It turns out that President-elect Donald Trump and his advisers don’t like that localized power and want more control over who will, or more likely won’t, be prosecuted. Since winning the election, they’ve been discussing federal legislation that would supersede state and federal laws, largely to undo the Martin Act. Paul Atkins, CEO of Wall Street consulting firm Patomak Global Partners, is apparently in talks to run the Security and Exchange Commission under Trump, and he’s been advocating against the Martin Act for years.
Schneiderman fired back against these perceived attacks on the Martin Act. “Any attempt to gut these consumer and investor protections would severely undercut state police powers and only embolden those who seek to defraud and exploit everyday Americans,” Schneiderman said in a public statement today. “At a time of regulatory uncertainty at the federal level, it is essential that we maintain the very laws that have helped state and local law enforcement keep consumers and investors safe for over one hundred years.”
Regardless of how hard Schneiderman fights, Trump may be willing to expend political capitol and go to toe-to-toe with the Attorney General until he wins. That’s because it’s not ideology on the line for him but business: Schneiderman’s Trump University lawsuit includes Martin Act violations.