S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2476--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 22, 2019
                                ___________
 
 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 -- read once and
   referred to the Committee on Judiciary -- reported and referred to the
   Committee on Codes --  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
 NON-FIDUCIARY  INVESTMENT  ADVISORS.   NON-FIDUCIARY INVESTMENT ADVISORS
 ARE INVESTMENT ADVISORS NOT SUBJECT TO A FIDUCIARY STANDARD UNDER  STATE
 OR FEDERAL LAWS OR REGULATIONS OR BY ANY APPLICABLE STANDARDS OF PROFES-
 SIONAL  CONDUCT,  AND MAY INCLUDE, BUT NOT BE LIMITED TO INDIVIDUALS AND
 INSTITUTIONS THAT IDENTIFY THEMSELVES TO CONSUMERS AS "BROKERS,"  "DEAL-
 ERS," "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.
   § 6-102. REQUIRED DISCLOSURE.  1.  NON-FIDUCIARY  INVESTMENT  ADVISORS
 SHALL  MAKE  A PLAIN LANGUAGE DISCLOSURE TO POTENTIAL CLIENTS ORALLY AND
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00750-05-9

 A. 2476--A                          2
 
 IN WRITING PRIOR TO ENTERING  INTO  ANY  CONTRACT  WITH  SUCH  POTENTIAL
 CLIENT  THAT  ENSURES  THE  POTENTIAL CLIENT IS AWARE THAT THE FIDUCIARY
 STANDARD DOES NOT APPLY TO THE NON-FIDUCIARY  INVESTMENT  ADVISOR.  SUCH
 REQUIRED  DISCLOSURE SHALL STATE THE FOLLOWING: "A NON-FIDUCIARY INVEST-
 MENT ADVISOR IS NOT REQUIRED BY LAW TO ACT SOLELY IN THE  CLIENT'S  BEST
 INTEREST.  FEDERAL LAW, STATE LAW, AND STANDARDS OF PROFESSIONAL CONDUCT
 DO NOT APPLY A FIDUCIARY  STANDARD  TO  MY  INVESTMENT  RECOMMENDATIONS,
 ALTHOUGH  OTHER  STANDARDS MAY APPLY. YOU MAY ASK ANY ADVISOR TO EXPLAIN
 TO YOU THE STANDARDS THAT APPLY TO  THEIR  INVESTMENT  RECOMMENDATIONS."
 THE NON-FIDUCIARY INVESTMENT ADVISOR SHALL PROVIDE A COPY OF THE DISCLO-
 SURE FORM TO THEIR CLIENT.
   2.  A  WRITTEN  CLIENT  AGREEMENT  MUST  INCLUDE  A  SEPARATELY SIGNED
 ACKNOWLEDGEMENT BY THE CLIENT THAT THIS PLAIN  LANGUAGE  DISCLOSURE  WAS
 PROVIDED. THE NON-FIDUCIARY INVESTMENT ADVISOR SHALL MAINTAIN THE SIGNED
 ACKNOWLEDGEMENT ALONGSIDE THE WRITTEN CLIENT AGREEMENT.
   3.  INVESTMENT  BROCHURES,  ADVERTISING  MATERIALS,  OR  OTHER RELATED
 PRINTED INFORMATION PROVIDED TO POTENTIAL CLIENTS MUST ALSO INCLUDE SUCH
 DISCLOSURE SET FORTH IN A CLEAR AND CONSPICUOUS MANNER.
   4. INVESTMENT ADVISORS THAT ARE SUBJECT TO A FIDUCIARY STANDARD  UNDER
 STATE  OR  FEDERAL  LAW OR REGULATION OR APPLICABLE STANDARDS OF PROFES-
 SIONAL CONDUCT WITH RESPECT TO CERTAIN TYPES OF  INVESTMENT  ADVICE  BUT
 NOT  OTHERS,  MUST  DISCLOSE  IN PLAIN LANGUAGE IN WRITING THE EXTENT TO
 WHICH THE FIDUCIARY STANDARD APPLIES  IN  THE  CONTEXT  OF  EACH  CLIENT
 RELATIONSHIP.
   §  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.