S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    675
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 11, 2023
                                ___________
 
 Introduced  by  M.  of A. DINOWITZ, STECK, SEAWRIGHT, BICHOTTE HERMELYN,
   COOK, COLTON, 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
 STANDARD DOES NOT APPLY TO THE NON-FIDUCIARY  INVESTMENT  ADVISOR.  SUCH
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00582-01-3
              

 A. 675                              2
 
 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.