S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2464--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 20, 2017
                                ___________
 
 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, TITONE -- read
   once and referred to  the  Committee  on  Judiciary  --  reported  and
   referred  to the Committee on Codes -- recommitted to the Committee on
   Codes in  accordance  with  Assembly  Rule  3,  sec.  2  --  committee
   discharged, bill amended, ordered reprinted as amended and recommitted
   to said committee
 
 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:
 
   Section 1. The general obligations law is  amended  by  adding  a  new
 article 6 to read as follows:
                                 ARTICLE 6
                        INVESTMENT TRANSPARENCY ACT
 SECTION 6-101. APPLICATION.
         6-102. REQUIRED DISCLOSURE.
         6-103. ENFORCEMENT.
   § 6-101. APPLICATION. THE PROVISIONS OF THIS ARTICLE ARE APPLICABLE TO
 INVESTMENT  ADVISORS CURRENTLY NOT SUBJECT TO A FIDUCIARY STANDARD UNDER
 EXISTING STATE AND FEDERAL LAWS OR  REGULATIONS  OR  BY  ANY  APPLICABLE
 STANDARDS  OF  PROFESSIONAL CONDUCT. "NON-FIDUCIARY INVESTMENT ADVISORS"
 SHALL INCLUDE, BUT NOT BE LIMITED TO INDIVIDUALS AND  INSTITUTIONS  THAT
 IDENTIFY  THEMSELVES  TO  CONSUMERS AS "BROKERS," "DEALERS," "INVESTMENT
 ADVISORS,"  "FINANCIAL  ADVISORS,"  "FINANCIAL   PLANNERS,"   "FINANCIAL
 CONSULTANTS,"  "RETIREMENT  PLANNERS," "RETIREMENT BROKERS," "RETIREMENT
 CONSULTANTS," OR BY ANY OTHER TERM THAT  IS  SUGGESTIVE  OF  INVESTMENT,
 FINANCIAL PLANNING, OR RETIREMENT PLANNING KNOWLEDGE OR EXPERTISE.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03774-02-8
              

 A. 2464--A                          2
 
   §  6-102.  REQUIRED  DISCLOSURE.  1. NON-FIDUCIARY INVESTMENT ADVISORS
 SHALL MAKE A PLAIN LANGUAGE DISCLOSURE TO CLIENTS ORALLY AND IN  WRITING
 AT THE OUTSET OF THE RELATIONSHIP THAT ENSURES THAT INDIVIDUAL INVESTORS
 ARE  AWARE  OF POTENTIAL CONFLICTS OF INTEREST. SUCH REQUIRED DISCLOSURE
 SHALL  STATE  THE  FOLLOWING: "I AM NOT A FIDUCIARY. THEREFORE, I AM NOT
 REQUIRED TO ACT IN YOUR BEST INTERESTS,  AND  AM  ALLOWED  TO  RECOMMEND
 INVESTMENTS  THAT  MAY EARN HIGHER FEES FOR ME OR MY FIRM, EVEN IF THOSE
 INVESTMENTS MAY NOT HAVE  THE  BEST  COMBINATION  OF  FEES,  RISKS,  AND
 EXPECTED  RETURNS  FOR  YOU." THE NON-FIDUCIARY INVESTMENT ADVISOR SHALL
 PROVIDE A COPY OF THE DISCLOSURE FORM TO THEIR CLIENT.
   2. A SIGNED ACKNOWLEDGEMENT BY THE CLIENT  THAT  THIS  PLAIN  LANGUAGE
 DISCLOSURE  WAS PROVIDED MUST BE MAINTAINED BY THE NON-FIDUCIARY INVEST-
 MENT ADVISOR ALONGSIDE ANY WRITTEN CLIENT AGREEMENT.
   3. ANY INVESTMENT BROCHURES, ADVERTISING MATERIALS, OR  OTHER  RELATED
 PRINTED  INFORMATION PROVIDED TO CLIENTS, OR ANY SUBSEQUENT ORAL INVEST-
 MENT ADVICE TO THEM, MUST ALSO INCLUDE SUCH DISCLOSURE SET  FORTH  IN  A
 CLEAR AND CONSPICUOUS MANNER. THE NON-FIDUCIARY INVESTMENT ADVISOR SHALL
 PROVIDE A COPY OF THE DISCLOSURE FORM TO THEIR CLIENT.
   4.  INVESTMENT  ADVISORS  THAT ARE SUBJECT TO THE FIDUCIARY DUTY UNDER
 LAW OR APPLICABLE STANDARDS OF  PROFESSIONAL  CONDUCT  WITH  RESPECT  TO
 CERTAIN  TYPES  OF  INVESTMENT  ADVICE  BUT NOT OTHERS, MUST DISCLOSE IN
 PLAIN LANGUAGE THE EXTENT TO WHICH THE FIDUCIARY DUTY DOES AND DOES  NOT
 APPLY.
   §  6-103.  ENFORCEMENT. WHENEVER THE ATTORNEY GENERAL FINDS THAT THERE
 HAS BEEN A VIOLATION OF THIS ARTICLE, HE OR SHE MAY PROCEED AS  PROVIDED
 IN SUBDIVISION TWELVE OF SECTION SIXTY-THREE OF THE EXECUTIVE LAW. CIVIL
 PENALTIES  UP TO FIVE THOUSAND DOLLARS MAY BE IMPOSED FOR EACH VIOLATION
 OF THIS ARTICLE.
   § 2. This act shall take effect on the first of January next  succeed-
 ing the date on which it shall have become a law.