NY State Senate Bill 2021-S4761

Senate Bill S4761

2021-2022 Legislative Session

Requires securities dealers and brokers to have a professional liability insurance policy of at least one million dollars

download bill text pdf

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to consumer protection
Feb 10, 2021	referred to consumer protection

2021-S4761 (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §359-e, Gen Bus L; amd §107, Ins L

2021-S4761 (ACTIVE) - Summary

Requires securities dealers and brokers to have a professional liability insurance policy of at least one million dollars; requires proof of such insurance policy to be submitted to the department of law; requires notice of such insurance policy to be provided to clients.

2021-S4761 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S4761

SPONSOR: MAY
 
TITLE OF BILL:

An act to amend the general business law and the insurance law, in
relation to requiring securities dealers and brokers to have a profes-
sional liability insurance policy of at least one million dollars

 
PURPOSE:

The purpose of this bill is to protect clients of securities dealers
from fraud by requiring dealers of any size to obtain liability insur-
ance.

 
SUMMARY OF PROVISIONS:

Section 1: Sets forth that all securities dealers and brokers will be
required to carry a professional liability insurance policy of at least
one million dollars, and will be required to provide proof of this
liability insurance to both the New York State Attorney General's Office

and the consumer. This section also sets forth what will satisfy proof
of professional liability insurance, and what financial professionals
are not bound by this requirement.

Section 2: Defines professional liability insurance.

Section 3: Sets the effective date.

 
JUSTIFICATION:

Securities dealers and brokers in New York State that manage over $100
million in assets must carry a professional liability insurance policy,
but those that manage less are not required to carry such a policy. This
bill corrects this loophole and will protect clients of all securities
dealers and brokers. In particular, it will protect elderly citizens of
New York State, who, given their age and income levels, are particularly
susceptible to fraud by dishonest securities dealers and brokers.  New
York State has recently adopted a new law requiring all financial advi-
sors to register with the State. Registration of all securities dealers
will aid in enforcement of this new insurance requirement.

The State of Oregon has recently adopted this law as well.

 
LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
January 1st after enactment

2021-S4761 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4761
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             February 10, 2021
                                ___________
 
 Introduced  by  Sen.  MAY  --  read  twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general business  law  and  the  insurance  law,  in
   relation to requiring securities dealers and brokers to have a profes-
   sional liability insurance policy of at least one million dollars

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 359-e of the general business  law  is  amended  by
 adding a new subdivision 13-a to read as follows:
   13-A.  (A)  BEGINNING  UPON THE EFFECTIVE DATE OF THIS SUBDIVISION, IT
 SHALL BE UNLAWFUL FOR ANY DEALER, BROKER OR SALESMAN TO  SELL  OR  OFFER
 FOR  SALE  TO OR PURCHASE OR OFFER TO PURCHASE FROM ANY PERSON WITHIN OR
 FROM THIS STATE, ANY SECURITIES ISSUED OR TO BE ISSUED, UNLESS AND UNTIL
 SUCH DEALER, BROKER OR SALESMAN, OR THE PRINCIPAL OF SUCH DEALER, BROKER
 OR SALESMAN SHALL HAVE (I) ACQUIRED A POLICY FOR PROFESSIONAL  LIABILITY
 INSURANCE  OF  AT LEAST ONE MILLION DOLLARS; (II) PROVIDED PROOF OF SUCH
 PROFESSIONAL LIABILITY INSURANCE POLICY TO THE DEPARTMENT  OF  LAW;  AND
 (III) PROVIDED NOTICE OF SUCH PROFESSIONAL LIABILITY INSURANCE POLICY TO
 SUCH PERSON.
   (B)  PROVISION  OF PROOF OF PROFESSIONAL LIABILITY INSURANCE, PURSUANT
 TO SUBPARAGRAPH (II) OF PARAGRAPH (A)  OF  THIS  SUBDIVISION,  SHALL  BE
 SATISFIED  BY  SUBMITTING  TO  THE  DEPARTMENT  OF LAW AN ATTESTATION OF
 COMPLIANCE ON A FORM THAT SHALL BE SUPPLIED BY THE  DEPARTMENT  OF  LAW,
 WITH A CERTIFICATE OF LIABILITY COVERAGE SPECIFYING PROFESSIONAL LIABIL-
 ITY  INSURANCE,  AS SUCH TERM IS DEFINED BY SECTION ONE HUNDRED SEVEN OF
 THE INSURANCE LAW.
   (C) THE PROVISIONS OF THIS SUBDIVISION SHALL NOT APPLY TO ANY  DEALER,
 BROKER  OR  SALESMAN NOT OTHERWISE REQUIRED TO REGISTER WITH THE DEPART-
 MENT OF LAW.
   (D) AS USED IN THIS  SUBDIVISION,  THE  TERM  "PROFESSIONAL  LIABILITY
 INSURANCE"  SHALL  HAVE  THE SAME MEANING AS DEFINED BY PARAGRAPH FORTY-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD09443-01-1

 S. 4761                             2
 
 NINE OF SUBSECTION (A) OF SECTION ONE HUNDRED  SEVEN  OF  THE  INSURANCE
 LAW.
   §  2.  Paragraph  49 of subsection (a) of section 107 of the insurance
 law, as added by chapter 220 of the laws of 1986, is amended to read  as
 follows:
   (49)  "Professional  liability  insurance"  means  insurance  covering
 liability arising out of the practice  of  any  profession  OR  BUSINESS
 PRACTICE for which (I) a license is required by a governmental authority
 of this state [or,]; (II) with respect to treatment of patients, arising
 out of the operation of a duly certified hospital; OR (III) WITH RESPECT
 TO  THE  SALE  OR  PURCHASE  OF  SECURITIES, A REGISTRATION STATEMENT IS
 REQUIRED TO BE FILED WITH THE DEPARTMENT OF LAW.
   § 3. This act shall take effect on the first of January next  succeed-
 ing the date on which it shall have become a law. Effective immediately,
 the  addition,  amendment and/or repeal of any rule or regulation neces-
 sary for the implementation of  this  act  on  its  effective  date  are
 authorized to be made and completed on or before such effective date.

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