See Orestes J. Mihaly & David J. Kaufman, Practice Commentary, GBL Art.23-A, p. 25 (McKinney 1996):

... the fundamental purpose of the Martin Act is to insure that prospective purchasers of securities, commodities and real estate securities offered and sold in or from New York are furnished with sufficient factual information for them to make intelligent investment decisions, a purpose accomplished by means of dissemination of full and fair disclosure of all "material" facts.

James W. Everett, Jr., Broker Dealer Regulation, State Proceedings Office, Securities Industry Association (August 12, 1997) (exhibit to testimony of James W. Everett, Jr., at New York Public Hearings).

Senate Hearing, supra note 16 (statement of Senator Max Cleland).

State v. The Rachmani Corp., 525 N.E.2d 704 (1988).

TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976), motion denied 429 U.S. 810.

The Large Firm Project, SEC Div. of Market Regulation (May 1994), CCH Fed. Sec. L. Rptr. [1993-94 Trans. Binder] ¶85,340, 85,351.

The determination of what constitutes "excessive" would be based on normal industry levels, in relation to the number of years employed in the securities industry.

Senate Hearing,> supra note 16 (testimony of Arthur Levitt).

New York Public Hearings, supra note 2 (written testimony of Robert H. Newtson, Director of the Illinois Securities Department).

New York Public Hearings, supra note 2 (written testimony of Denise Voigt Crawford, Texas Securities Commissioner).

Id.

New York Public Hearings, supra note 2 (written testimony of Deborah Bortner, Washington Securities Administrator).

New York Public Hearings (July 29, 1997) supra note 2, at 24-25 (testimony of Mark Griffin).

Id. at 41.

Under the Martin Act, unregistered activities are defined as fraudulent practices (GBL § 352 (1)), and are therefore subject to criminal prosecution (GBL § 352-c (1) (a)) as well as civil action for a permanent injunction and restitution (GBL § 353, subds. (1) and (3)).

See e.g., 1994 Mich. Pub. Acts 265 §451.604 Sec. 204.(a) (1)(F); Chapter 1, Title 35, S.C. Code Ann. § 35-1-520(1)(vi) (Law. Co-op. 1997).

A. 6757 (March 25, 1997).

New York Public Hearings (Aug. 12, 1997) supra note 2, at 39 (testimony of Barry J. Mandel).

See Memorandum in Support, A. 6757.

Georgia, Idaho, Illinois, Maine, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, and West Virginia.

See New York Public Hearings (Aug. 12, 1997) supra note 2, at 10 (testimony of John Moscow, the lead prosecutor of the pending Baron indictment for enterprise corruption, calling for higher capitalization levels for firms like Baron).

Justice Brandeis stated that, "Sunlight is the best disinfectant." This view has been recently echoed as it relates to micro-cap stock fraud. See New York Public Hearings (Aug. 12, 1997) supra note 2, at 38 (testimony of Barry J. Mandel stating: "These Hearings alone, in and of themselves, are very important, too. As Justice Brandeis stated, Sunlight is the best disinfectant. By shining some bright light on boiler rooms and their methods, the hearings can educate the public as to the basic nature of this unscrupulous activity).

See also Senate Hearing, supra note 16 (opening statement of Senator Susan M. Collins: "Mindful of Justice Brandeis' observation that 'sunlight is the best disinfectant,' we have a responsibility to expose abusive practices so that the American people can be on guard against them.").

Arthur Levitt, Chairman, U.S. Securities and Exchange Commission, Testimony Before the Subcommittee on Commerce, Justice, and State, The Judiciary, and related Agencies of the House Committee on Appropriations (March 14, 1997) (transcript available on SEC Internet website).

At the time of Stratton's expulsion from the securities industry (see Chapter 10, ENFORCEMENT ACTIONS, supra), the Attorney General's Investor Protection and Securities Bureau was conducting an inquiry to determine whether Stratton was conducting business without adequate capital. The staff determined that as of December 1995 Stratton had 250 customer lawsuits or arbitrations pending against the firm seeking $36 million in damages. By any measure -- and the firm itself had a practice of valuing and settling these claims at $.30 on the dollar (approximately $10.8 million) -- Stratton's unliquidated customer claims outstripped its regulatory capital. Yet as these claims mounted, Stratton's principals and telemarketers continued to drain its coffers leaving defrauded investors with an empty treasury. Existing law and federal regulatory practice addressing dealer capital must be reformed to halt those who would operate or deplete their assets below the expected value of their liabilities. See Financial Accounting Standards Board, FASB Statement of Standards No. 5 (1975); Matter of Xonics Photochemical, Inc., 841 F.2d 198, 200 (1988) (Posner) (contingent liability or asset must be valued at its expected value in determining solvency).