New York may use Martin Act against Goldman Sachs

District Attorney Cyrus Vance Jr. has subpoenaed Goldman Sachs, the fifth-biggest U.S. bank by assets, for records on its activities leading into the credit crisis, two people familiar with the matter said. Vance may bring charges under the state's Martin Act, which lawyers call a potent tool for New York prosecutors probing investment fraud, Ponzi schemes and other white-collar crimes.

To prove securities fraud in federal court, U.S. prosecutors must show that a defendant intended to defraud victims and that the investors relied on misstatements or omissions. Under the Martin Act, New York prosecutors aren't required to prove intent, said Michael Perino, a law professor at St. John's University in New York.

"The reason why New York prosecutors love it so much and Wall Street firms hate it so much is that it is a much, much easier case to bring," Perino said. "All a prosecutor has to show under the Martin Act is a material misstatement in connection with a securities offering."