Bill Text: NY A01026 | 2021-2022 | General Assembly | Introduced
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 14-0)
Status: (Introduced - Dead) 2022-02-17 - advanced to third reading cal.418 [A01026 Detail]
Download: New_York-2021-A01026-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 1026 2021-2022 Regular Sessions IN ASSEMBLY January 7, 2021 ___________ Introduced by M. of A. DINOWITZ, GOTTFRIED, STECK, PICHARDO, SEAWRIGHT, BICHOTTE, COOK, COLTON, GALEF, 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD05253-01-1A. 1026 2 1 standard does not apply to the non-fiduciary investment advisor. Such 2 required disclosure shall state the following: "A non-fiduciary invest- 3 ment advisor is not required by law to act solely in the client's best 4 interest. Federal law, state law, and standards of professional conduct 5 do not apply a fiduciary standard to my investment recommendations, 6 although other standards may apply. You may ask any advisor to explain 7 to you the standards that apply to their investment recommendations." 8 The non-fiduciary investment advisor shall provide a copy of the disclo- 9 sure form to their client. 10 2. A written client agreement must include a separately signed 11 acknowledgement by the client that this plain language disclosure was 12 provided. The non-fiduciary investment advisor shall maintain the signed 13 acknowledgement alongside the written client agreement. 14 3. Investment brochures, advertising materials, or other related 15 printed information provided to potential clients must also include such 16 disclosure set forth in a clear and conspicuous manner. 17 4. Investment advisors that are subject to a fiduciary standard under 18 state or federal law or regulation or applicable standards of profes- 19 sional conduct with respect to certain types of investment advice but 20 not others, must disclose in plain language in writing the extent to 21 which the fiduciary standard applies in the context of each client 22 relationship. 23 § 6-103. Enforcement. Whenever the attorney general finds that there 24 has been a violation of this article, he or she may proceed as provided 25 in subdivision twelve of section sixty-three of the executive law. Civil 26 penalties up to five thousand dollars may be imposed for each violation 27 of this article. 28 § 2. This act shall take effect on the first of January next succeed- 29 ing the date on which it shall have become a law.