By JENNIFER PELTZ
Associated Press

NEW YORK (AP) - Perpetrators of million-dollar stock and bond swindles should be forced to go to prison, one of the city's top prosecutors said as he called for boosting penalties for breaking a wide-ranging state securities fraud law.

By imposing the same punishment on a small-time schemer who gains $500 and a sweeping, sophisticated fraudster who costs investors millions of dollars, New York's law "is marred by overly lenient penalties," Manhattan District Attorney Cyrus R. Vance Jr. said in a speech to the New York City Bar Association.

He said he'll push state lawmakers to make sentences increase with the size of a securities scheme, and he is eyeing broader application of the securities law in the future.

The state law, called the Martin Act, dates to 1921, though it has been updated since. It prohibits deception and misrepresentation in offering stocks, bonds or other securities to investors. It can carry civil and criminal penalties, ranging from fines and restitution to prison time.

Prosecutors see it as a powerful and nimble tool, broader than many other state fraud statutes and able to capture some misbehavior that federal securities fraud laws don't. The law takes aim at "all deceitful practices contrary to the plain rules of common honesty," as the state's highest court, the Court of Appeals, put it in 1926.

As New York's attorney general in the 1990s, future Gov. Eliot Spitzer earned the nickname "sheriff of Wall Street" by using the Martin Act to go after big financial firms.

Vance, who took office last year, has used it against people. They include a money manager accused of concocting ties to a Belgian royal family to con investors out of at least $7 million; and a former bank director charged with illegally giving friends and relatives stock in a financial fiefdom he'd built out of automotive chemical companies. Both have pleaded not guilty.

The worst Martin Act offense now is a low-level felony. It can carry up to four years in prison, with the possibility of parole after 1 1/3 years, but it doesn't require any time behind bars.

It can apply to dealers who defraud 10 or more people and gain as little as $250. There is no worse penalty for those whose scams are far larger, though some also face grand larceny or other charges that carry stiffer sentences.

Vance wants Martin Act criminal penalties to increase with the size of a scheme. Under his proposal, those who swindled $1 million or more would spend at least a year in prison and could spend up to 25 years.

"The Martin Act has never been more relevant," he said, calling it crucial to rooting out deceit that saps trust in financial markets and can contribute to upheaval. "In recent years, our entire nation has become painfully aware of the devastating toll on our economy that results when widespread mistrust infects financial markets."

To that end, Vance suggested he plans to put the law to work in a growing array of cases, including commodities schemes, insider trading and scams that target brokers and dealers.