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Credit Suisse Wins Narrowing of $11 Billion Suit, Martin Act

  • New York’s highest court says state law has three-year term
  • Anti-fraud tool has been used to police stock, bond sales
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New York’s powerful anti-fraud weapon known as the Martin Act was crimped by the state’s highest court, which scaled back what was an $11 billion lawsuit against Credit Suisse Group AG over mortgage-securities practices in the run-up to the financial crisis.

The New York Court of Appeals found that many of the claims were too old after determining that the law’s statute-of-limitations was three years, not six years. The Martin Act has been used by state authorities to police the securities markets since the 1920s, so the ruling may limit the prosecution of fraud in stock and bond sales and some other financial transactions.