Bill Text: NY S02872 | 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 1-0)

Status: (Introduced - Dead) 2020-01-08 - REFERRED TO JUDICIARY [S02872 Detail]

Download: New_York-2019-S02872-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          2872
                               2019-2020 Regular Sessions
                    IN SENATE
                                    January 30, 2019
                                       ___________
        Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
          printed to be committed 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
    23  required to act in your best interests,  and  am  allowed  to  recommend
    24  investments  that  may earn higher fees for me or my firm, even if those
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00750-01-9
        S. 2872                             2
     1  investments may not have  the  best  combination  of  fees,  risks,  and
     2  expected  returns  for  you." The non-fiduciary investment advisor shall
     3  provide a copy of the disclosure form to their client.
     4    2.  A  signed  acknowledgement  by the client that this plain language
     5  disclosure was provided must be maintained by the non-fiduciary  invest-
     6  ment advisor alongside any written client agreement.
     7    3.  Any  investment brochures, advertising materials, or other related
     8  printed information provided to clients, or any subsequent oral  invest-
     9  ment  advice  to  them, must also include such disclosure set forth in a
    10  clear and conspicuous manner. The non-fiduciary investment advisor shall
    11  provide a copy of the disclosure form to their client.
    12    4. Investment advisors that are subject to the  fiduciary  duty  under
    13  law  or  applicable  standards  of  professional conduct with respect to
    14  certain types of investment advice but  not  others,  must  disclose  in
    15  plain  language the extent to which the fiduciary duty does and does not
    16  apply.
    17    § 6-103. Enforcement. Whenever the attorney general finds  that  there
    18  has  been a violation of this article, he or she may proceed as provided
    19  in subdivision twelve of section sixty-three of the executive law. Civil
    20  penalties up to five thousand dollars may be imposed for each  violation
    21  of this article.
    22    §  2. This act shall take effect on the first of January next succeed-
    23  ing the date on which it shall have become a law.