Bill Text: NY A02476 | 2019-2020 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relates to mandating greater levels of disclosure by non-fiduciaries that provide investment advice; requires signed acknowledgement of disclosure informing clients that the advisor owes no fiduciary duty.

Spectrum: Partisan Bill (Democrat 17-0)

Status: (Introduced - Dead) 2020-01-08 - referred to codes [A02476 Detail]

Download: New_York-2019-A02476-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          2476
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 22, 2019
                                       ___________
        Introduced  by  M.  of  A.  DINOWITZ, GOTTFRIED, ORTIZ, STECK, PICHARDO,
          MOSLEY, BLAKE, SEAWRIGHT, BICHOTTE, COOK, COLTON, GALEF,  BUCHWALD  --
          Multi-Sponsored  by  -- M. of A. DAVILA, GLICK, SIMON -- read once and
          referred to the Committee on Judiciary
        AN ACT to amend the general obligations law, in  relation  to  mandating
          greater  levels  of disclosure by non-fiduciaries that provide invest-
          ment advice
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  The  general  obligations  law is amended by adding a new
     2  article 6 to read as follows:
     3                                  ARTICLE 6
     4                         INVESTMENT TRANSPARENCY ACT
     5  Section 6-101. Application.
     6          6-102. Required disclosure.
     7          6-103. Enforcement.
     8    § 6-101. Application. The provisions of this article are applicable to
     9  investment advisors currently not subject to a fiduciary standard  under
    10  existing  state  and  federal  laws  or regulations or by any applicable
    11  standards of professional conduct. "Non-fiduciary  investment  advisors"
    12  shall  include,  but not be limited to individuals and institutions that
    13  identify themselves to consumers as  "brokers,"  "dealers,"  "investment
    14  advisors,"   "financial   advisors,"  "financial  planners,"  "financial
    15  consultants," "retirement planners," "retirement  brokers,"  "retirement
    16  consultants,"  or  by  any  other term that is suggestive of investment,
    17  financial planning, or retirement planning knowledge or expertise.
    18    § 6-102. Required disclosure.  1.  Non-fiduciary  investment  advisors
    19  shall  make a plain language disclosure to clients orally and in writing
    20  at the outset of the relationship that ensures that individual investors
    21  are aware of potential conflicts of interest. Such  required  disclosure
    22  shall  state  the  following: "I am not a fiduciary. Therefore, I am not
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00750-01-9
        A. 2476                             2
     1  required to act in your best interests,  and  am  allowed  to  recommend
     2  investments  that  may earn higher fees for me or my firm, even if those
     3  investments may not have  the  best  combination  of  fees,  risks,  and
     4  expected  returns  for  you." The non-fiduciary investment advisor shall
     5  provide a copy of the disclosure form to their client.
     6    2. A signed acknowledgement by the client  that  this  plain  language
     7  disclosure  was provided must be maintained by the non-fiduciary invest-
     8  ment advisor alongside any written client agreement.
     9    3. Any investment brochures, advertising materials, or  other  related
    10  printed  information provided to clients, or any subsequent oral invest-
    11  ment advice to them, must also include such disclosure set  forth  in  a
    12  clear and conspicuous manner. The non-fiduciary investment advisor shall
    13  provide a copy of the disclosure form to their client.
    14    4.  Investment  advisors  that are subject to the fiduciary duty under
    15  law or applicable standards of  professional  conduct  with  respect  to
    16  certain  types  of  investment  advice  but not others, must disclose in
    17  plain language the extent to which the fiduciary duty does and does  not
    18  apply.
    19    §  6-103.  Enforcement. Whenever the attorney general finds that there
    20  has been a violation of this article, he or she may proceed as  provided
    21  in subdivision twelve of section sixty-three of the executive law. Civil
    22  penalties  up to five thousand dollars may be imposed for each violation
    23  of this article.
    24    § 2. This act shall take effect on the first of January next  succeed-
    25  ing the date on which it shall have become a law.