New York’s Executive Law Section 63(12) empowers the state to dissolve enterprises and remove licenses for fraud.
Former President Donald Trump and his cronies are being prosecuted under the legislation, which may affect American businesses.
The law’s lack of fraud requirement is contentious. The state can win if it can prove the defendants created a “atmosphere conducive to fraud.”
This low bar of proof raises fears that the rule might target firms for trivial or technical infractions.
Another problem is that the state does not have to prove the defendant’s actions harmed anyone.
This means that businesses could be dissolved and their licenses revoked, even if their customers and employees were never at risk.
The New York v. Trump case is still ongoing, but it is already clear that the outcome will have a significant impact on American businesses.
The state’s prosecution of Trump and his allies might create a precedent for using the Executive Law against other corporations, even if they haven’t done anything wrong.
Businesses may be more cautious and avoid taking risks that may lead to prosecution, which could chill the business community. Innovation and economic growth may suffer.
The Executive Law is not the only US law that empowers the government to dissolve enterprises for fraud or other misbehavior.
New York’s statute is wide and provides the state a lot of authority. Businesses and legal experts nationwide will monitor the New York v. Trump lawsuit.