S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1026
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              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:
 
   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
 IN  WRITING  PRIOR  TO  ENTERING  INTO  ANY CONTRACT WITH SUCH POTENTIAL
 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.
              

                                                            LBD05253-01-1

 A. 1026                             2
 
 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.