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- Title
Using the Martin Act to Bring Fraudulent Practices in Dark Pool Promotion to Light: An Analysis of the Martin Act's Applicability to Misrepresentations Regarding the Operation of Dark Pools.
- Authors
SGAMBATI, BROOKE
- Abstract
In June 2014, New York Attorney General Eric Schneiderman filed a complaint against Barclays Capital in the Supreme Court of the State of New York, alleging that Barclays made material misrepresentations to its clients regarding the operation of its dark pool, Barclays LX. Schneiderman's complaint relied on the Martin Act, a New York state securities law that grants the Attorney General broad power to combat fraud in the purchase or sale of securities, to bring the action against Barclays. This Note will address an issue of first impression that is central to Schneiderman's case: does the Martin Act authorize the Attorney General to exercise broad oversight over the operation of dark pools (which are best described as platforms for securities transactions) or must actions brought by the Attorney General under the Martin Act relate to specific securities transactions that occur within dark pools? A broad reading of the Attorney General's authority under the Martin Act would allow his office to investigate and prosecute misrepresentations like those that Barclays allegedly made to persuade customers to use its dark pool. A narrow conception of his power would limit his office's ability to regulate the operation of dark pools and likely would require dismissal of the case against Barclays. This Note will also discuss whether a broad reading of the Martin Act, which would permit the Attorney General to use the statute to require more transparency in the operation of dark pools, would be beneficial from a public policy standpoint, or if such a reading is an impermissible expansion of a law that has already been criticized for granting the Attorney General an extraordinary amount of power.
- Subjects
COMPLAINTS (Civil procedure); BARCLAYS Capital PLC; FRAUD; DARK pools (Economics); SCHNEIDERMAN, Eric T., 1954-
- Publication
Columbia Journal of Law & Social Problems, 2016, Vol 49, Issue 4, p585
- ISSN
0010-1923
- Publication type
Article