S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7420
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 24, 2023
                                ___________
 
 Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT to amend the financial services law, in relation to allowing  the
   department of financial services to have additional oversight of banks
   and insurance companies that are not currently licensed

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  legislature  finds  that  it  is  essential  to  the
 protection  of  users  of financial products and services from imprudent
 conduct and harmful business practices in the financial services market-
 place that all persons offering financial products and services  in  New
 York State be sufficiently deterred from disregarding the laws and regu-
 lations  governing  the  offering  of  financial  products  or services,
 regardless of whether they are properly licensed. Furthermore, to ensure
 that the business of, and the persons providing, financial products  and
 services  are  appropriately  supervised,  the  law should not advantage
 persons who disregard licensing requirements. Currently, as  to  engage-
 ment  in  many activities for which a license from the superintendent of
 financial services is required, an unlicensed  person  not  exempt  from
 licensing is not subject to civil penalty for acts that would constitute
 violations subject to penalty if the person were licensed; such an unli-
 censed  person may be subject to only a limited civil penalty for engag-
 ing in activity without a required license.  This  act  remediates  this
 fault  in  the  law by providing that any person engaged in activity for
 which such person must be licensed by the  superintendent  of  financial
 services will be subject to a civil penalty for conducting such activity
 in  a  manner  inconsistent  with  the  law, regardless of such person's
 licensure status.
   § 2. Subdivisions (a) and (b) of section 305 of the financial services
 law are amended to read as follows:

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11198-01-3
 S. 7420                             2
              

 
   (a) Unless otherwise provided in this chapter, the  banking  law,  the
 insurance law or any other law, any hearing pursuant to any such law may
 be  held  before  the  superintendent, any deputy superintendent, or any
 designated salaried employee of the department authorized by the  super-
 intendent  for  such purpose. Any adjudicatory proceeding, including any
 hearings to assess civil penalties under section four hundred  eight  OR
 FOUR HUNDRED EIGHT-A of this chapter, held pursuant to the provisions of
 this  chapter,  the  insurance  law or the banking law shall be noticed,
 conducted and administered in compliance with the  state  administrative
 procedure act.
   (b)  The person conducting such hearing shall have power to administer
 oaths, examine  and  cross-examine  witnesses  and  receive  documentary
 evidence, and shall report his or her findings, orally or in writing, to
 the  superintendent  with  or  without  recommendation.  Such report, if
 adopted by the superintendent may be the basis of any determination made
 by the superintendent. One hundred twenty days after the effective  date
 of  a determination of liability for a civil penalty pursuant to section
 four hundred eight OR FOUR HUNDRED  EIGHT-A  of  this  chapter  or  four
 hundred  three,  one  thousand one hundred two, two thousand one hundred
 two, two thousand one hundred seventeen, two thousand one hundred  thir-
 ty-three  or  seven thousand eight hundred sixteen of the insurance law,
 such determination of liability for a civil penalty may be entered as  a
 judgment  and enforced, without court proceedings, in the same manner as
 the enforcement of a money judgment in civil actions  in  any  court  of
 competent  jurisdiction  or  any  other  place provided for the entry of
 civil judgment within this state.
   § 3. Subdivision (a) of section 404 of the financial services  law  is
 amended to read as follows:
   (a)  The  superintendent has authority under this article, the banking
 law, the insurance law and other applicable laws to  investigate  activ-
 ities  that  may  constitute  violations subject to section four hundred
 eight OR FOUR HUNDRED EIGHT-A of  this  article  or  violations  of  the
 insurance law or banking law and to develop evidence thereon.
   §  4.  The  financial  services law is amended by adding a new section
 408-a to read as follows:
   § 408-A. UNLICENSED ACTIVITIES PROHIBITED. (A)  FOR  THE  PURPOSES  OF
 THIS SECTION, A "PROHIBITED UNLICENSED ACT" SHALL MEAN:
   (1) ENGAGING IN AN ACTIVITY IN THIS STATE FOR WHICH A LICENSE, CERTIF-
 ICATION,  REGISTRATION,  AUTHORIZATION, CHARTER, ACCREDITATION, INCORPO-
 RATION, OR APPROVAL BY THE SUPERINTENDENT IS REQUIRED BY  THIS  CHAPTER,
 THE BANKING LAW, THE INSURANCE LAW, OR THE REGULATIONS PROMULGATED THER-
 EUNDER,  WITHOUT  SUCH  LICENSE,  CERTIFICATION,  REGISTRATION, AUTHORI-
 ZATION,  CHARTER,  ACCREDITATION,  INCORPORATION  OR  APPROVAL   OR   AN
 EXEMPTION FROM SUCH REQUIREMENT; OR
   (2)  ANY  ACT OR OMISSION BY A PERSON WHO IS REQUIRED BY THIS CHAPTER,
 THE BANKING LAW, THE INSURANCE LAW OR THE REGULATIONS PROMULGATED THERE-
 UNDER, TO BE LICENSED,  CERTIFIED,  REGISTERED,  AUTHORIZED,  CHARTERED,
 ACCREDITED, INCORPORATED OR OTHERWISE APPROVED BY THE SUPERINTENDENT AND
 IS  NOT  SO  LICENSED,  CERTIFIED,  REGISTERED,  AUTHORIZED,  CHARTERED,
 ACCREDITED, INCORPORATED, APPROVED OR EXEMPTED FROM SUCH REQUIREMENT, IF
 SUCH ACT OR OMISSION WOULD CONSTITUTE A VIOLATION OF THIS  CHAPTER,  THE
 BANKING LAW, THE INSURANCE LAW OR THE REGULATIONS PROMULGATED THEREUNDER
 IF  SUCH  PERSON  WERE  SO  LICENSED, CERTIFIED, REGISTERED, AUTHORIZED,
 CHARTERED, ACCREDITED, INCORPORATED OR APPROVED.
 S. 7420                             3
 
   (B) IN ADDITION TO ANY CIVIL OR CRIMINAL LIABILITY  PROVIDED  BY  LAW,
 THE SUPERINTENDENT MAY, AFTER NOTICE AND A HEARING, LEVY A CIVIL PENALTY
 FOR ANY PROHIBITED UNLICENSED ACT AS FOLLOWS:
   (1)  THE  PENALTY  FOR A PROHIBITED UNLICENSED ACT THAT RELATES TO THE
 REQUIREMENTS OF THE BANKING LAW OR THE  REGULATIONS  PROMULGATED  THERE-
 UNDER SHALL BE THE SAME AS THE PENALTY PROVIDED IN SECTION FORTY-FOUR OF
 THE BANKING LAW FOR ANY VIOLATION OF THE BANKING LAW.
   (2) THE PENALTY FOR A PROHIBITED UNLICENSED ACT DESCRIBED IN PARAGRAPH
 ONE  OF SUBDIVISION (A) OF THIS SECTION THAT RELATES TO THE REQUIREMENTS
 OF THE INSURANCE LAW OR THE REGULATIONS PROMULGATED THEREUNDER SHALL  BE
 THE SAME AS THE PENALTY FOR VIOLATIONS SET FORTH IN SECTION ONE THOUSAND
 ONE HUNDRED TWO OF THE INSURANCE LAW.
   (3) THE PENALTY FOR A PROHIBITED UNLICENSED ACT DESCRIBED IN PARAGRAPH
 TWO  OF SUBDIVISION (A) OF THIS SECTION THAT RELATES TO THE REQUIREMENTS
 OF THE INSURANCE LAW OR THE REGULATIONS PROMULGATED THEREUNDER SHALL  BE
 THE  SAME AS THE PENALTY FOR VIOLATIONS SET FORTH IN SECTION ONE HUNDRED
 NINE OF THE INSURANCE LAW OR  ANY  OTHER  APPLICABLE  PROVISION  OF  THE
 INSURANCE LAW, WHICHEVER IS HIGHER.
   (4)  THE  PENALTY  FOR A PROHIBITED UNLICENSED ACT THAT RELATES TO THE
 REQUIREMENTS OF THIS CHAPTER OR THE REGULATIONS  PROMULGATED  THEREUNDER
 SHALL  BE  THE  SAME AS THE PENALTY PROVIDED FOR IN SECTION FOUR HUNDRED
 EIGHT OF THIS ARTICLE FOR VIOLATIONS OF THIS CHAPTER OR THE  REGULATIONS
 PROMULGATED THEREUNDER.
   (5)  IF  A  PROHIBITED  UNLICENSED  ACT  RESULTS IN CONSUMER HARM, THE
 PENALTY SHALL BE NOT MORE THAN DOUBLE THE PENALTY AMOUNT  APPLICABLE  TO
 SUCH  VIOLATION  SET  FORTH IN PARAGRAPH ONE, TWO, THREE OR FOUR OF THIS
 SUBDIVISION, AS APPLICABLE.
   (C) THE SUPERINTENDENT SHALL NOT IMPOSE OR COLLECT ANY PENALTY  FOR  A
 PROHIBITED  UNLICENSED ACT PURSUANT TO PARAGRAPH FOUR OF SUBDIVISION (B)
 OF THIS SECTION IF THE SUPERINTENDENT IMPOSES OR  COLLECTS  ANY  PENALTY
 PURSUANT  TO  PARAGRAPH  ONE,  TWO  OR  THREE OF SUBDIVISION (B) OF THIS
 SECTION FOR THE SAME ACT OR OMISSION.
   (D) CIVIL PENALTIES RECEIVED BY THE SUPERINTENDENT  PURSUANT  TO  THIS
 SECTION  SHALL BE APPLIED IN THE SAME MANNER AS CIVIL PENALTIES RECEIVED
 BY THE SUPERINTENDENT PURSUANT TO SECTION FOUR  HUNDRED  EIGHT  OF  THIS
 CHAPTER.
   (E) IN ADDITION TO ANY OTHER PENALTY OR SANCTION IMPOSED UPON A PERSON
 BY  LAW  FOR  AN  UNLICENSED ACT, AFTER NOTICE AND A HEARING, THE SUPER-
 INTENDENT MAY ISSUE AN ORDER DIRECTING SUCH PERSON  TO  PAY  RESTITUTION
 FOR SUCH UNLICENSED ACT.
   §  5.  Subdivision (a) of section 409 of the financial services law is
 amended to read as follows:
   (a) Whenever the superintendent is satisfied that a violation  subject
 to section four hundred eight OR FOUR HUNDRED EIGHT-A of this article or
 fraud  or other criminal activity under the insurance law or banking law
 has been committed or attempted, the  superintendent  shall  report  any
 such  violation  of law, as the superintendent deems appropriate, to the
 appropriate licensing agency, the district attorney  of  the  county  in
 which  such  acts  were  committed,  to  the attorney general, and where
 appropriate, to the person who submitted the report of fraudulent activ-
 ity, as provided by the provisions of this article. Within  one  hundred
 twenty  days  of  receipt  of  the superintendent's report, the attorney
 general or the district attorney concerned shall inform the  superinten-
 dent as to the status of the reported violations.
   § 6. This act shall take effect immediately.