(Reuters) — A New York state appeals court has revived a lawsuit brought by the state attorney general's office against Charles Schwab & Co. Inc. over claims that the brokerage firm fraudulently marketed auction-rate securities.

The 2009 lawsuit accused the San Francisco-based firm of fraud in the marketing and sale of the securities and claimed the company's brokers falsely represented the securities as safe, liquid investments. The lawsuit was brought by former New York Attorney General Andrew Cuomo.

Tuesday's 4-0 decision from a panel of New York's Appellate Division said that the state had provided sufficient evidence to warrant a trial on two claims brought under the state's Martin Act.

The Act, a 1921 securities law, gives New York's attorney general the ability to prosecute fraud without proving intent. The law's broad definition of fraud extends to acts which "tend to deceive or mislead" the public.

"We find the Martin Act causes of action to be sufficiently pleaded given the fact that the statute is remedial and should be broadly construed in order to attain its beneficent purpose," the appeals court wrote.

The court, however, said the claims were revived only with respect to Schwab's alleged conduct prior to Sept. 5, 2007, which was the date of the first failure of a class of auction-rate securities sold by Schwab.

The ruling partially reversed a 2011 decision from a state judge who had dismissed the case. The appeals court upheld the dismissal of two related claims that were not made under the Martin Act, finding the attorney general did not have standing to bring them.

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A spokeswoman for Schwab said in a statement that the company did not aggressively market auction-rate securities, and that it had redeemed 98% of the securities from customers.

The office of Attorney General Eric Schneiderman did not return a request for comment.

Auction-rate securities are long-term debt similar to bonds whose interest rates reset periodically through auctions. The banks that handled the auctions abandoned the $330 billion market in February 2008 and the market collapsed, leaving thousands of investors without the ability to sell the supposedly liquid securities.

Schwab was one of the few firms that declined to settle with Mr. Cuomo over fraud claims relating to auction-rate securities.

Citigroup Inc., UBS AG, Bank of America Corp.'s Merrill Lynch and others agreed to repurchase more than $60 billion in debt to settle the claims.

Thousands of customers of Schwab held about $787.9 million of auction-rate securities as of Feb. 13, 2008, Mr. Cuomo's office estimated in 2009. Sarah Bulgatz, a spokeswoman for Schwab, said it was not immediately clear how Tuesday's decision could affect Schwab's exposure in the suit.

The lawsuit seeks to have Schwab buy back securities from customers and pay restitution and civil penalties.

Charles Schwab & Co. Inc. is the broker-dealer subsidiary of Charles Schwab Corp.