Starr Foundation v. American International Group, Inc.

Moskowitz, J. (dissenting).

In 1927, in Continental Ins. Co. v Mercadante (222 App Div 181 [1927]), this Court held actionable a claim for fraudulent inducement to retain, rather than sell, a security. Today, the majority has effectively eviscerated this holding. Because I believe the better rule is to allow recovery, under certain circumstances, when fraud induces a plaintiff to hold securities, I respectfully dissent. I would also hold that plaintiff can pursue its claim in this direct action.

Plaintiff The Starr Foundation (plaintiff or Starr) is a charit*34able foundation whose primary asset…