New York Court of Appeals Holds that The Martin Act, New York’s “Blue Sky” Law, Does Not Preempt Common Law Claims for Breach of Fiduciary Duty and Gross Negligence

On December 20, 2011, in an important decision for the investment management community, the New York Court of Appeals ruled that the Martin Act does not preclude overlapping private tort claims brought by individual investors.  See “First Department Decision May Give Aggrieved Hedge Fund Investors an Unexpected and Powerful Avenue of Redress,” Hedge Fund Law Report, Vol. 4, No. 9 (Mar. 11, 2011).  This article details the background of the action, the court’s legal analysis and the potential implications of the decision for lawsuits by hedge fund investors against hedge fund managers.

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