William Galvin, the top securities regulator in Massachusetts, expressed concern earlier this week that U.S. lawmakers might try to rein in enforcement of state securities laws.
U.S. lawmakers tried unsuccessfully to pass legislation to that end in 2003, he said.
The bill was introduced shortly after former New York Attorney General Eliot Spitzer used the Martin Act to reach an agreement with 10 investment banks, which agreed to pay more than $1 billion to settle claims that they misled investors with biased stock research.
More recently, Schneiderman used the act to sue Barclays Plc , accusing the bank of misleading investors about the presence of high-frequency traders on a stock trading platform.
The Martin Act is "incredibly broad," but it is very hard to find that there have been abuses in applying it, said Duke University School Law professor James Cox.
"It's been very good at shining a light on conduct that has a very bad odor."
This article was provided by Reuters.