Bill Text: NY A00675 | 2023-2024 | General Assembly | Introduced

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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 10-0)

Status: (Introduced) 2024-01-03 - referred to judiciary [A00675 Detail]

Download: New_York-2023-A00675-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                           675

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    January 11, 2023
                                       ___________

        Introduced  by  M.  of A. DINOWITZ, STECK, SEAWRIGHT, BICHOTTE HERMELYN,
          COOK, COLTON, THIELE -- 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  non-fiduciary  investment  advisors.   Non-fiduciary investment advisors
    10  are investment advisors not subject to a fiduciary standard under  state
    11  or federal laws or regulations or by any applicable standards of profes-
    12  sional  conduct,  and may include, but not be limited to individuals and
    13  institutions that identify themselves to consumers as "brokers,"  "deal-
    14  ers," "investment advisors," "financial advisors," "financial planners,"
    15  "financial  consultants,"  "retirement  planners," "retirement brokers,"
    16  "retirement consultants," or by any other term  that  is  suggestive  of
    17  investment,  financial  planning,  or  retirement  planning knowledge or
    18  expertise.
    19    § 6-102. Required disclosure.  1.  Non-fiduciary  investment  advisors
    20  shall  make  a plain language disclosure to potential clients orally and
    21  in writing prior to entering  into  any  contract  with  such  potential
    22  client  that  ensures  the  potential client is aware that the fiduciary
    23  standard does not apply to the non-fiduciary  investment  advisor.  Such

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00582-01-3
        A. 675                              2

     1  required  disclosure shall state the following: "A non-fiduciary invest-
     2  ment advisor is not required by law to act solely in the  client's  best
     3  interest.  Federal law, state law, and standards of professional conduct
     4  do  not  apply  a  fiduciary  standard to my investment recommendations,
     5  although other standards may apply. You may ask any advisor  to  explain
     6  to  you  the  standards that apply to their investment recommendations."
     7  The non-fiduciary investment advisor shall provide a copy of the disclo-
     8  sure form to their client.
     9    2. A  written  client  agreement  must  include  a  separately  signed
    10  acknowledgement  by  the  client that this plain language disclosure was
    11  provided. The non-fiduciary investment advisor shall maintain the signed
    12  acknowledgement alongside the written client agreement.
    13    3. Investment  brochures,  advertising  materials,  or  other  related
    14  printed information provided to potential clients must also include such
    15  disclosure set forth in a clear and conspicuous manner.
    16    4.  Investment advisors that are subject to a fiduciary standard under
    17  state or federal law or regulation or applicable  standards  of  profes-
    18  sional  conduct  with  respect to certain types of investment advice but
    19  not others, must disclose in plain language in  writing  the  extent  to
    20  which  the  fiduciary  standard  applies  in  the context of each client
    21  relationship.
    22    § 6-103. Enforcement. Whenever the attorney general finds  that  there
    23  has  been a violation of this article, he or she may proceed as provided
    24  in subdivision twelve of section sixty-three of the executive law. Civil
    25  penalties up to five thousand dollars may be imposed for each  violation
    26  of this article.
    27    §  2. This act shall take effect on the first of January next succeed-
    28  ing the date on which it shall have become a law.