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. LBD00750-01-9S. 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.