Court reins in Wall St. fraudbusters

ALBANY – New York's highest court on Tuesday limited the amount of time prosecutors have to bring fraud cases under the Martin Act — the powerful tool often used to police wrongdoing on Wall Street.

In a 4-to-1 decision, the Court of Appeals ruled that Martin Act claims operate under a three-year statute of limitations instead of the sixyear period claimed by thenAttorney General Eric Schneiderman in a case brought against Credit Suisse Securities.

Court of Appeals Chief Judge Janet DiFiore, writing for the majority, wrote that state law “generally imposes a three-year limitation period for ‘an action to recover upon a liability, penalty or forfeiture created or imposed by statute.'”

The decision was a setback for new state Attorney General Barbara Underwood, who inherited the case against Credit Suisse after Schneiderman resigned in May after allegations he physically abused women.

Initiated in 2012, the lawsuit charged that Credit Suisse deceived investors about the strength of its mortgagebacked securities. Credit Suisse argued that the bulk of the case was time-barred because the Martin Act carries only a threeyear statute of limitations.

While siding largely with Credit Suisse, DiFiore also ruled that some of the fraud claims against Credit Suisse may also be covered under so-called common law, which carries a six-year statute of limitations. She remanded the case back to the lower courts for a determination.

A spokeswoman for Underwood shrugged off the decision and said the case against Credit Suisse would continue.

“This decision will have no impact on our efforts to vigorously pursue financial fraud wherever it exists in New York,” said spokeswoman Amy Spitalnick. “That includes continuing our case against Credit Suisse.”