New York’s 1920s securities law, called the Martin Act, gives the state attorney general broad powers over financial fraud. However, Judge Lewis Bart Stone, in a courtroom conference with the prosecuting and defense attorneys, pointed out that Henry Morris, former comptroller Alan Hevesi’s political adviser and chief fund-raiser, did not work for the state, according to Reuters.
Stone said this lack of a direct relationship may raise questions about whether Morris was required to disclose the fees he was paid from investment firms which sought business from the state pension fund. “This is real judge stuff because (Henry) Morris was not a state employee,” said Stone, according to Reuters. “This is very interesting to me– that will be an issue that sooner or later will get resolved.”
Stone predicted his decision might eventually be appealed to the state’s top court.
Cuomo’s two-year investigation has been joined by the U.S. Securities and Exchange Commission and has sparked probes in other states, including New Mexico and California, as well as within the California Public Employees Retirement System (see CalPERS to Examine Fees Paid to Adviser ).
The lawyers for Morris and David Loglisci, the former state pension investment officer who has also been charged (see Former NY Common Fund CIO Charged by SEC ), say their clients are innocent.
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