Section 1. Short title. This act shall be known and may be cited as
the "New York state agency BIPOC asset management and financial institu-
tion strategy act".
§ 2. The retirement and social security law is amended by adding a new
section 423-d to read as follows:
§ 423-D. BIPOC-OWNED INVESTMENT MANAGEMENT FIRMS; STATE OF NEW YORK.
1. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:
(A) "BEST PRACTICES" SHALL MEAN INDUSTRY-RECOGNIZED STANDARDS AND
GUIDELINES FOR DIVERSITY, EQUITY, AND INCLUSION.
(B) "BIPOC" SHALL MEAN BLACK, INDIGENOUS, AND PEOPLE OF COLOR.
(C) "BIPOC-OWNED FIRMS" SHALL MEAN BUSINESS ENTERPRISES OWNED BY INDI-
VIDUALS FROM BLACK, INDIGENOUS, AND PEOPLE OF COLOR COMMUNITIES.
(D) "DESIGNATED ENTITIES" SHALL MEAN ENTITIES GOVERNED BY THIS
SECTION, INCLUDING BUT NOT LIMITED TO, THE COMMON RETIREMENT FUND, THE
NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, AND THE NEW YORK STATE
INSURANCE FUND.
(E) "EMERGING MANAGER PROGRAMS" SHALL MEAN PROGRAMS DESIGNED TO
ENHANCE OPPORTUNITIES FOR SMALL, DISADVANTAGED, OR BIPOC-OWNED BUSINESS
ENTERPRISES.
(F) "FIDUCIARIES" SHALL MEAN INDIVIDUALS ENTRUSTED WITH FIDUCIARY
DUTIES WITHIN THE DESIGNATED ENTITIES.
2. (A) ALL PUBLIC PENSION FUNDS IN THE STATE SHALL PROVIDE OPPORTU-
NITIES FOR EMERGING BIPOC-OWNED INVESTMENT MANAGEMENT FIRMS. SUCH PUBLIC
PENSION FUNDS SHALL ADOPT AN INVESTMENT MANAGER DIVERSITY POLICY TO SET
OBJECTIVES FOR ENHANCING THE UTILIZATION OF BIPOC INVESTMENT MANAGEMENT
FIRMS.
(B) TWENTY PERCENT OF A PUBLIC PENSION FUND'S TOTAL ASSETS SHALL BE
INVESTED WITH BIPOC INVESTMENT MANAGERS.
(C) TWENTY-FIVE PERCENT OF A PUBLIC PENSION FUND'S ACTIVE ASSETS SHALL
BE INVESTED WITH BIPOC INVESTMENT MANAGERS.
(D) THERE SHALL BE AN ASSET CLASS BREAKDOWN AS FOLLOWS:
(I) THIRTY PERCENT OF A PUBLIC PENSION FUND'S EQUITY ASSETS SHALL BE
INVESTED WITH BIPOC INVESTMENT MANAGERS;
(II) FIFTEEN PERCENT OF A PUBLIC PENSION FUND'S FIXED INCOME ASSETS
SHALL BE INVESTED WITH BIPOC INVESTMENT MANAGERS; AND
(III) FIFTEEN PERCENT OF A PUBLIC PENSION FUND'S ALTERNATIVE ASSETS
SHALL BE INVESTED WITH BIPOC INVESTMENT MANAGERS.
3. PURSUANT TO SUBDIVISION TWO OF THIS SECTION, THE UTILIZATION STAND-
ARDS SHALL SERVE AS THE MINIMUM REQUIREMENT, AND SUCH STANDARDS MAY BE
SUBJECT TO MODIFICATION IN RESPONSE TO CHANGES IN THE NUMBER OF BIPOC
INVESTMENT MANAGERS THAT ARE CAPABLE OF DIRECTLY MANAGING MANDATES FROM
A PUBLIC PENSION FUND.
4. (A) A PUBLIC PENSION FUND SHALL, WITHIN SIX MONTHS OF THE EFFECTIVE
DATE OF THIS SECTION, ESTABLISH MECHANISMS TO ENSURE COMPLIANCE WITH THE
INVESTMENT MANAGER DIVERSITY POLICY.
(B) THE RELEVANT AUTHORITIES OF EACH PUBLIC PENSION FUND SHALL REPORT
ANNUALLY TO THE COMPTROLLER ON THE PROGRESS AND OUTCOMES ACHIEVED IN
MEETING THE UTILIZATION STANDARDS SET FORTH IN SUBDIVISION THREE OF THIS
SECTION.
(C) THE COMPTROLLER SHALL COMPILE AND PUBLISH AN ANNUAL REPORT DETAIL-
ING THE PROGRESS AND EFFECTIVENESS OF THE INVESTMENT MANAGER DIVERSITY
POLICY.
5. (A) WITHIN SIX MONTHS OF THE EFFECTIVE DATE OF THIS SECTION, EACH
PUBLIC PENSION FUND WITHIN THE STATE SHALL DEVELOP A COMPREHENSIVE
IMPLEMENTATION PLAN TO ENSURE COMPLIANCE WITH THE INVESTMENT MANAGER
A. 5471 3
DIVERSITY POLICY OUTLINED IN SUBDIVISION TWO OF THIS SECTION. THIS PLAN
SHALL DETAIL THE STRATEGIES, PROCEDURES, AND TIMELINES THAT SUCH FUND
SHALL ADOPT TO ACHIEVE THE SPECIFIED UTILIZATION STANDARDS FOR BIPOC
INVESTMENT MANAGERS ACROSS VARIOUS ASSET CLASSES.
(B) THE GOVERNING BODY OF EACH PUBLIC PENSION FUND SHALL SUBMIT AN
ANNUAL PROGRESS REPORT TO THE CITY COMPTROLLER OUTLINING THE ADVANCE-
MENTS MADE IN FULFILLING THE INVESTMENT MANAGER DIVERSITY POLICY'S
REQUIREMENTS. SUCH REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO:
(I) THE TOTAL ASSETS MANAGED BY BIPOC INVESTMENT MANAGERS AS A
PERCENTAGE OF THE FUND'S TOTAL ASSETS;
(II) THE ACTIVE ASSETS MANAGED BY BIPOC INVESTMENT MANAGERS AS A
PERCENTAGE OF THE FUND'S ACTIVE ASSETS;
(III) THE ALLOCATION OF EQUITY, FIXED INCOME, AND ALTERNATIVE ASSETS
TO BIPOC INVESTMENT MANAGERS; AND
(IV) AN ASSESSMENT OF ANY CHALLENGES FACED AND STEPS TAKEN TO ADDRESS
THEM.
(C) EACH PUBLIC PENSION FUND SHALL PROVIDE A NARRATIVE REPORT DETAIL-
ING ANY INITIATIVES, PROGRAMS, OR PARTNERSHIPS ESTABLISHED TO PROMOTE
THE GROWTH AND DEVELOPMENT OF BIPOC-OWNED INVESTMENT MANAGEMENT FIRMS
WITHIN THE STATE. SUCH REPORT SHALL HIGHLIGHT SUCCESSFUL COLLABORATIONS
AND THE IMPACT OF THESE INITIATIVES ON DIVERSIFYING THE INVESTMENT LAND-
SCAPE.
(D) ALL ANNUAL REPORTS SUBMITTED TO THE COMPTROLLER SHALL BE MADE
PUBLICLY AVAILABLE ON THE FUND'S WEBSITE, ENSURING TRANSPARENCY AND
ACCOUNTABILITY TO THE PUBLIC.
6. (A) THE COMPTROLLER SHALL REVIEW AND ASSESS THE ANNUAL PROGRESS
REPORTS SUBMITTED BY THE PUBLIC PENSION FUNDS.
(B) IN THE EVENT THAT A PUBLIC PENSION FUND FAILS TO MEET THE UTILIZA-
TION STANDARDS SPECIFIED IN SUBDIVISION TWO OF THIS SECTION, THE COMP-
TROLLER SHALL WORK CLOSELY WITH SUCH FUND TO IDENTIFY THE REASONS FOR
NON-COMPLIANCE AND PROVIDE GUIDANCE ON CORRECTIVE ACTIONS.
(C) THE COMPTROLLER SHALL COMPILE THE INFORMATION RECEIVED FROM THE
PUBLIC PENSION FUNDS AND PRODUCE AN ANNUAL REPORT ASSESSING THE OVERALL
PROGRESS AND EFFECTIVENESS OF THE INVESTMENT MANAGER DIVERSITY POLICY
ACROSS THE STATE. SUCH REPORT SHALL ALSO INCLUDE RECOMMENDATIONS FOR
ENHANCING DIVERSITY AND INCLUSION IN ASSET MANAGEMENT WITHIN THE PUBLIC
PENSION SECTOR.
7. TO PROMOTE AWARENESS AND UNDERSTANDING OF THE GOALS AND BENEFITS OF
THE INVESTMENT MANAGER DIVERSITY POLICY, EACH PUBLIC PENSION FUND SHALL
ESTABLISH PUBLIC OUTREACH AND EDUCATIONAL PROGRAMS THAT ENGAGE THE
COMMUNITY, INVESTMENT PROFESSIONALS, AND OTHER STAKEHOLDERS. SUCH
PROGRAMS MAY INCLUDE SEMINARS, WORKSHOPS, WEBINARS, AND INFORMATIONAL
MATERIALS THAT HIGHLIGHT THE VALUE OF DIVERSE INVESTMENT MANAGEMENT
TEAMS AND THE POTENTIAL FOR ECONOMIC GROWTH THROUGH BIPOC-OWNED BUSI-
NESSES.
8. TO SUPPORT THE GROWTH OF EMERGING BIPOC-OWNED INVESTMENT MANAGEMENT
FIRMS, EACH PUBLIC PENSION FUND SHALL EXPLORE OPPORTUNITIES TO PROVIDE
TECHNICAL ASSISTANCE, MENTORSHIP, AND RESOURCES. SUCH SUPPORT MAY ENCOM-
PASS FINANCIAL EDUCATION, NETWORKING OPPORTUNITIES, AND GUIDANCE ON
COMPLIANCE AND BEST PRACTICES, WITH THE AIM OF FOSTERING A VIBRANT
ECOSYSTEM OF DIVERSE INVESTMENT PROFESSIONALS.
9. FIVE YEARS AFTER THE EFFECTIVE DATE OF THIS SECTION, THE CITY COMP-
TROLLER SHALL CONDUCT A COMPREHENSIVE REVIEW OF THE INVESTMENT MANAGER
DIVERSITY POLICY'S IMPACT ON THE PUBLIC PENSION SECTOR'S DIVERSITY AND
INCLUSION GOALS.
A. 5471 4
§ 3. The retirement and social security law is amended by adding a new
section 423-e to read as follows:
§ 423-E. BIPOC-OWNED INVESTMENT MANAGEMENT FIRMS; CITY OF NEW YORK. 1.
FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:
(A) "BEST PRACTICES" SHALL MEAN INDUSTRY-RECOGNIZED STANDARDS AND
GUIDELINES FOR DIVERSITY, EQUITY, AND INCLUSION.
(B) "BIPOC" SHALL MEAN BLACK, INDIGENOUS, AND PEOPLE OF COLOR.
(C) "BIPOC-OWNED FIRMS" SHALL MEAN BUSINESS ENTERPRISES OWNED BY INDI-
VIDUALS FROM BLACK, INDIGENOUS, AND PEOPLE OF COLOR COMMUNITIES.
(D) "DESIGNATED ENTITIES" SHALL MEAN ENTITIES GOVERNED BY THIS
SECTION, INCLUDING BUT NOT LIMITED TO, THE COMMON RETIREMENT FUND, THE
NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, AND THE NEW YORK STATE
INSURANCE FUND.
(E) "EMERGING MANAGER PROGRAMS" SHALL MEAN PROGRAMS DESIGNED TO
ENHANCE OPPORTUNITIES FOR SMALL, DISADVANTAGED, OR BIPOC-OWNED BUSINESS
ENTERPRISES.
(F) "FIDUCIARIES" SHALL MEAN INDIVIDUALS ENTRUSTED WITH FIDUCIARY
DUTIES WITHIN THE DESIGNATED ENTITIES.
(G) "MUNICIPALITY" SHALL MEAN ANY CITY, VILLAGE, OR INCORPORATED TOWN
WITH AN INHABITANT COUNT ONE MILLION OR MORE BUT LESS THAN TWELVE
MILLION, AS DETERMINED BY UNITED STATES GOVERNMENT STATISTICS OR A RELE-
VANT CENSUS.
(H) "COMPENSATION" SHALL MEAN ANY MONEY, THING OF VALUE, OR ECONOMIC
BENEFIT CONFERRED ON OR RECEIVED BY A CONSULTANT IN EXCHANGE FOR
SERVICES RENDERED OR TO BE RENDERED.
(I) "ECONOMIC OPPORTUNITY" SHALL MEAN ANY TRANSACTION OR ARRANGEMENT
INVOLVING THE PURCHASE, SALE, LEASE, CONTRACT, OPTION, OR OTHER ENGAGE-
MENT RELATED TO PROPERTY OR SERVICES, IN WHICH A CONSULTANT MAY GAIN AN
ECONOMIC BENEFIT.
(J) "TRUSTEES" SHALL MEAN THE RELEVANT GOVERNING BODY, SUCH AS CITY
COUNCILS, BOARDS OF TRUSTEES, AND OTHER APPROPRIATE AUTHORITIES.
1-A. IN EACH MUNICIPALITY AND CITY AS DEFINED IN PARAGRAPH (G) OF
SUBDIVISION ONE OF THIS SECTION, THE RELEVANT GOVERNING BODY, SUCH AS
CITY COUNCILS, BOARDS OF TRUSTEES, AND OTHER APPROPRIATE AUTHORITIES,
SHALL ESTABLISH AND ADMINISTER SPECIFIC FUNDS AS DESCRIBED IN THIS
SECTION FOR THE BENEFIT OF POLICE OFFICERS, FIREFIGHTERS, MUNICIPAL
EMPLOYEES, OFFICERS, AND PUBLIC SCHOOL TEACHERS, ALONG WITH THEIR
SURVIVING SPOUSES, CHILDREN, AND CERTAIN OTHER DEPENDENTS.
2. (A) THE TRUSTEES OF EACH PUBLIC PENSION FUND IN THE CITY OF NEW
YORK SHALL BE MANDATED TO ALLOCATE NO LESS THAN FORTY PERCENT OF THE
TOTAL DOLLAR AMOUNT OF THE IDENTIFIED FUND UNDER MANAGEMENT TOWARDS
INVESTMENTS THROUGH BIPOC ASSET MANAGERS, BIPOC FINANCIAL INSTITUTIONS,
AND BIPOC FINANCIAL OR PROFESSIONAL SERVICE FIRMS.
(B) INVESTMENT FUNDS THAT DO NOT FALL UNDER THE BIPOC CATEGORY SHALL
ASPIRE TO REACH A MINIMUM OF TWENTY PERCENT BUT SHALL STRIVE TO ACHIEVE
THE GOAL OF FORTY PERCENT OF FUNDS RECEIVED FROM THE FUND BEING ALLO-
CATED TOWARDS BIPOC-LED INVESTMENTS.
3. THE SCOPE OF BIPOC INVESTMENTS COVERED BY THIS SECTION SHALL
INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING:
(A) INVESTING ASSETS OF THE VARIOUS PENSION FUNDS WITH BIPOC ASSET
MANAGERS, RECOGNIZING THEIR EXPERTISE, EXPERIENCE, AND UNIQUE PERSPEC-
TIVES IN MANAGING INVESTMENT PORTFOLIOS; AND
(B) SUBJECT TO BEST EXECUTION PRACTICES:
A. 5471 5
(I) CONDUCTING TRADES OF PUBLIC EQUITY SECURITIES WITH BIPOC FINANCIAL
INSTITUTIONS, PROMOTING COLLABORATION AND ECONOMIC OPPORTUNITIES WITHIN
THE BIPOC COMMUNITY; AND
(II) CONDUCTING TRADES OF FIXED-INCOME SECURITIES THROUGH BIPOC INSTI-
TUTIONS, CONTRIBUTING TO THE GROWTH AND DEVELOPMENT OF BIPOC-LED FINAN-
CIAL ENTITIES;
(C) ALLOCATING INVESTMENTS OF ALL PENSION FUND ASSETS THROUGH:
(I) DIRECT INVESTMENTS IN THE EQUITIES AND DEBT SECURITIES OF BIPOC
ENTITIES, FOSTERING CAPITAL FLOW TO BIPOC-LED PROJECTS AND BUSINESSES;
AND
(II) INDIRECT INVESTMENTS THROUGH SPECIAL PROGRAMS INVOLVING BIPOC
ASSET MANAGERS, FACILITATING PARTNERSHIPS AND PROMOTING ACCESS TO
INVESTMENT OPPORTUNITIES; AND
(D) AWARDING CONTRACTS FOR VARIOUS FINANCIAL AND PROFESSIONAL SERVICES
TO BIPOC FINANCIAL INSTITUTIONS AND OTHER BIPOC PROFESSIONAL SERVICE
FIRMS, ENSURING EQUITABLE DISTRIBUTION OF OPPORTUNITIES AND SUPPORTING
THE GROWTH OF BIPOC-LED ENTERPRISES.
4. (A) THE TRUSTEES OF THE VARIOUS FUNDS SHALL HAVE THE AUTHORITY TO
ESTABLISH ADDITIONAL GOALS THAT SUPPLEMENT THE REQUIREMENTS STATED IN
SUBDIVISION TWO OF THIS SECTION.
(B) WITHIN SIXTY DAYS OF THE CONCLUSION OF EACH FISCAL YEAR SUBSEQUENT
TO THE EFFECTIVE DATE OF THIS SECTION, THE TRUSTEES SHALL PROVIDE A
COMPREHENSIVE REPORT TO THE CITY COMPTROLLER. SUCH REPORT SHALL DETAIL
THE PARTICIPATION OF BIPOC ASSET MANAGERS, BIPOC FINANCIAL INSTITUTIONS,
AND BIPOC PROFESSIONAL SERVICE PROVIDERS IN INVESTMENT AND BROKERAGE
TRANSACTIONS, AS WELL AS THEIR PROVISION OF SERVICES FOR THE FUND.
(C) SUCH REPORT SHALL INCLUDE A COMPARATIVE ANALYSIS OF THE ACTIVITIES
OUTLINED IN SUBDIVISION THREE OF THIS SECTION IN RELATION TO ALL ASSET
MANAGERS, FINANCIAL INSTITUTIONS, AND PROFESSIONAL SERVICE PROVIDERS
ENGAGED BY THE CITY COMPTROLLER OF THE PENSION FUND DURING THE RELEVANT
PERIOD.
(D) SUCH REPORT SHALL EVALUATE AND HIGHLIGHT THE PROGRESS AND SUCCESS
ACHIEVED IN PURSUING THE ASPIRATIONAL GOALS OUTLINED IN SUBDIVISION TWO
OF THIS SECTION. THESE EFFORTS SHALL BE UNDERTAKEN TO THE GREATEST
EXTENT FEASIBLE, ENSURING COMPLIANCE WITH FINANCIAL AND FIDUCIARY
PRUDENCE.
(E) EACH REPORT SHALL BE PROMPTLY PUBLISHED ON THE OFFICIAL WEBSITE OF
THE APPLICABLE INVESTMENT FUND, REMAINING ACCESSIBLE FOR A MINIMUM PERI-
OD OF SIXTY DAYS FOLLOWING ITS RELEASE.
5. (A) EFFECTIVE JANUARY FIRST, TWO THOUSAND TWENTY-SIX, AND ON EACH
SUBSEQUENT JANUARY FIRST THEREAFTER, ANY CONSULTANT RETAINED BY THE FUND
SHALL DISCLOSE TO THE TRUSTEES ALL COMPENSATION AND ECONOMIC OPPORTU-
NITIES RECEIVED IN THE PRECEDING TWENTY-FOUR MONTHS FROM INVESTMENT
ADVISORS RETAINED BY THE TRUSTEES.
(B) A CONSULTANT SHALL DISCLOSE TO THE TRUSTEES ANY COMPENSATION OR
ECONOMIC OPPORTUNITY RECEIVED WITHIN THE PAST TWENTY-FOUR MONTHS FROM AN
INVESTMENT ADVISOR THAT IS RECOMMENDED FOR SELECTION BY SUCH CONSULTANT.
SUCH DISCLOSURE SHALL BE MADE PRIOR TO THE TRUSTEES APPOINTING AN
INVESTMENT ADVISOR. NO CONTRACT FOR CONSULTING SERVICES SHALL BE AWARDED
BY THE TRUSTEES OF THE FUND WITHOUT FIRST REQUIRING THE CONSULTANT TO
FULFILL THE NECESSARY DISCLOSURE REQUIREMENTS STATED WITHIN THIS
SECTION.
6. TO QUALIFY FOR FUND ALLOCATION AS PROVIDED UNDER THIS SECTION, THE
FOLLOWING MINIMUM REQUIREMENTS SHALL BE MET BY THE RESPECTIVE FIRMS:
(A) FOR REAL ESTATE MANAGER QUALIFICATIONS:
A. 5471 6
(I) THE FIRM SHALL MANAGE GROSS ASSETS UNDER MANAGEMENT ACROSS ALL
CLIENTS THAT ARE LESS THAN TWO BILLION DOLLARS AT THE INCEPTION OF THE
RELATIONSHIP;
(II) THE FIRM'S LATEST FUND OFFERINGS SHALL SEEK LESS THAN TWO HUNDRED
FIFTY MILLION DOLLARS OF EQUITY;
(III) REAL ESTATE FIRMS SHALL HAVE AT LEAST FORTY-FIVE PERCENT OF
THEIR ECONOMIC INTERESTS OWNED BY PRINCIPALS AND EMPLOYEES; AND
(IV) QUALIFIED REAL ESTATE MANAGERS SHALL OPERATE AND RESIDE WITHIN
NEW YORK STATE.
(B) FOR PRIVATE EQUITY MANAGER QUALIFICATIONS:
(I) THE FIRM SHALL BE A LEGALLY STRUCTURED ENTITY, ADHERING TO ALL
APPLICABLE LAWS AND REGULATIONS;
(II) THE FIRM SHALL HAVE A PRIVATE PLACEMENT MEMORANDUM (PPM) IN
PLACE;
(III) THE FIRM SHALL RAISE A FIRST, SECOND, OR THIRD INSTITUTIONAL
FUND; AND
(IV) THE FIRM'S INSTITUTIONAL FUND SHALL NOT EXCEED CERTAIN FUND SIZE
LIMITS.
(C) FOR FIXED INCOME MANAGER QUALIFICATIONS:
(I) THE FIRM SHALL HAVE TWO BILLION DOLLARS OR LESS IN ASSETS UNDER
MANAGEMENT;
(II) THE FIRM SHALL HAVE A MAXIMUM OF FIFTY PERCENT NON-EMPLOYEE
OWNERSHIP; AND
(III) THE FIRM SHALL BE A LEGALLY STRUCTURED ENTITY WITH A VALID
CORPORATE TAX IDENTIFICATION NUMBER.
(D) FOR A REGISTERED INVESTMENT ADVISOR OR EXEMPTION, THE FIRM SHALL
BE A REGISTERED INVESTMENT ADVISOR OR QUALIFY FOR EXEMPTION FROM REGIS-
TRATION.
§ 4. This act shall take effect immediately.
PART B
Section 1. The comptroller and the commissioner of the department of
taxation and finance shall jointly undertake a study on the feasibility
of a venture capital program within the common retirement fund and a
venture capital tax credit, for investments in emerging diverse founding
member businesses, and evaluate and make recommendations to ensure equi-
table access to investment opportunities, promote diversity and inclu-
sion in investment opportunities and foster the growth of diverse found-
ing member businesses within the state.
§ 2. The comptroller and the commissioner of the department of taxa-
tion and finance shall study the feasibility of a venture capital
program within the common retirement fund for the purpose of investing
in partnerships, corporations, trusts or limited liability companies
organized on a for-profit basis that enter into agreements to invest the
moneys of the common retirement fund in qualified businesses as defined
in this act.
§ 3. The study required by this act shall develop criteria for a
venture capital tax credit for investments made to a qualifying organ-
ization which shall include, at a minimum, the following:
1. (a) A qualified organization shall have at least one diverse found-
ing team member who: (i) owned initial shares or similar ownership
interests of the business; (ii) contributed to the concept of, research
for, development of, or work performed by the business before initial
shares were issued; and (iii) was not a passive investor in the busi-
ness; or
A. 5471 7
(b) who has been designated as the chief executive officer, president,
chief financial officer, or manager of a business, or who has been
designated with a role with a similar level of authority as any of those
positions.
A "diverse founding team member" shall mean a person who self-identi-
fies as a woman, non-binary, Black, African American, Hispanic, Latino-
Latina, Asian, Pacific Islander, Native American, Native Hawaiian, Alas-
kan Native, disabled, veteran or disabled veteran, lesbian, gay,
bisexual, transgender, or queer.
2. Qualified investments made by firms shall not be subject to limita-
tion, and firms may deduct qualified investments of up to 100 percent of
their taxable income.
3. The venture capital tax credit shall be a dollar-for-dollar tax
credit for investments made to a qualifying organization.
§ 4. A report on the study conducted pursuant to this act, along with
such legislative proposals deemed necessary to implement its recommenda-
tions, shall be submitted to the governor and the legislature within one
year of the effective date of this act.
§ 5. This act shall take effect immediately.
PART C
Section 1. Short title. This act shall be known and may be cited as
the "New York state investment transparency act".
§ 2. The executive law is amended by adding a new article 15-D to read
as follows:
ARTICLE 15-D
NEW YORK STATE INVESTMENT TRANSPARENCY ACT
SECTION 328-B. DEFINITIONS.
328-C. REPORTING.
328-D. REMEDIES.
§ 328-B. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING
TERMS SHALL HAVE THE FOLLOWING MEANINGS:
1. "COVERED ENTITY" SHALL MEAN A VENTURE CAPITAL COMPANY THAT:
(A) EITHER:
(I) PRIMARILY ENGAGES IN THE BUSINESS OF INVESTING IN, OR PROVIDING
FINANCING TO, STARTUP, EARLY-STAGE, OR EMERGING GROWTH COMPANIES; OR
(II) MANAGES ASSETS ON BEHALF OF THIRD-PARTY INVESTORS, INCLUDING, BUT
NOT LIMITED TO, INVESTMENTS MADE ON BEHALF OF A STATE OR LOCAL RETIRE-
MENT OR PUBLIC PENSION SYSTEMS PURSUANT TO ARTICLE FOUR-A OF THE RETIRE-
MENT AND SOCIAL SECURITY LAW; AND
(B) MEETS AT LEAST ONE OF THE FOLLOWING CRITERIA:
(I) IS HEADQUARTERED IN NEW YORK;
(II) HAS A SIGNIFICANT PRESENCE OR OPERATIONAL DIVISION IN NEW YORK;
(III) MAKES VENTURE CAPITAL INVESTMENTS IN BUSINESSES THAT ARE LOCATED
IN, OR HAVE SIGNIFICANT OPERATIONS IN, NEW YORK; AND/OR
(IV) SOLICITS OR RECEIVES INVESTMENTS FROM A PERSON WHO IS A RESIDENT
OF NEW YORK.
2. "DIVERSE FOUNDING TEAM MEMBER" SHALL MEAN A FOUNDING TEAM MEMBER
WHO SELF-IDENTIFIES AS A WOMAN, NON-BINARY, BLACK, AFRICAN AMERICAN,
HISPANIC, LATINO-LATINA, ASIAN, PACIFIC ISLANDER, NATIVE AMERICAN,
NATIVE HAWAIIAN, ALASKAN NATIVE, DISABLED, VETERAN OR DISABLED VETERAN,
LESBIAN, GAY, BISEXUAL, TRANSGENDER, OR QUEER.
3. "FOUNDING TEAM MEMBER" MEANS EITHER:
(A) A PERSON WHO:
A. 5471 8
(I) OWNED INITIAL SHARES OR SIMILAR OWNERSHIP INTERESTS OF THE BUSI-
NESS;
(II) CONTRIBUTED TO THE CONCEPT OF, RESEARCH FOR, DEVELOPMENT OF, OR
WORK PERFORMED BY THE BUSINESS BEFORE INITIAL SHARES WERE ISSUED; AND
(III) WAS NOT A PASSIVE INVESTOR IN THE BUSINESS; OR
(B) A PERSON WHO HAS BEEN DESIGNATED AS THE CHIEF EXECUTIVE OFFICER,
PRESIDENT, CHIEF FINANCIAL OFFICER, OR MANAGER OF A BUSINESS, OR A ROLE
WITH A SIMILAR LEVEL OF AUTHORITY.
4. "INVESTMENT ADVISOR" SHALL HAVE THE SAME MEANING AS SET FORTH IN
SUBPARAGRAPH (V) OF PARAGRAPH (A) OF SUBDIVISION FOURTEEN OF SECTION
THREE HUNDRED FIFTY-NINE-E OF THE GENERAL BUSINESS LAW.
5. "DIVISION" SHALL MEAN THE DIVISION OF MINORITY AND WOMEN'S BUSINESS
DEVELOPMENT, AS ESTABLISHED BY SECTION THREE HUNDRED ELEVEN OF THIS
CHAPTER.
§ 328-C. REPORTING. 1. BEGINNING ON JANUARY FIRST, TWO THOUSAND TWEN-
TY-SIX, AND ANNUALLY THEREAFTER, A COVERED ENTITY SHALL REPORT TO THE
DIVISION THE FOLLOWING INFORMATION REGARDING SUCH ENTITY'S FUNDING
DETERMINATIONS:
(A) THE FOLLOWING INFORMATION, AT AN AGGREGATED LEVEL, SHALL BE
REPORTED FOR THE FOUNDING TEAMS OF ALL BUSINESSES IN WHICH THE COVERED
ENTITY MADE A VENTURE CAPITAL INVESTMENT IN THE PREVIOUS CALENDAR YEAR,
TO THE EXTENT THAT SUCH INFORMATION HAS BEEN PROVIDED AS PART OF THE
SURVEY DESCRIBED IN PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION:
(I) THE GENDER IDENTITY OF EACH FOUNDING TEAM MEMBER, INCLUSIVE OF
NON-BINARY AND GENDER-FLUID IDENTITIES;
(II) THE RACIAL BACKGROUND OF EACH FOUNDING TEAM MEMBER;
(III) THE ETHNIC BACKGROUND OF EACH FOUNDING TEAM MEMBER;
(IV) THE DISABILITY STATUS OF EACH FOUNDING TEAM MEMBER;
(V) WHETHER ANY MEMBER OF THE FOUNDING TEAM IDENTIFIES AS LGBTQIA+;
(VI) WHETHER ANY MEMBER OF THE FOUNDING TEAM IS A VETERAN OR A DISA-
BLED VETERAN;
(VII) WHETHER ANY MEMBER OF THE FOUNDING TEAM IS A RESIDENT OF NEW
YORK; AND
(VIII) WHETHER ANY MEMBER OF THE FOUNDING TEAM OPTED NOT TO PROVIDE
ANY OF THE INFORMATION DETAILED IN SUBPARAGRAPHS (I) THROUGH (VII) OF
THIS PARAGRAPH.
(B) DURING THE PREVIOUS CALENDAR YEAR, THE NUMBER OF VENTURE CAPITAL
INVESTMENTS TO BUSINESSES PRIMARILY FOUNDED BY DIVERSE FOUNDING TEAM
MEMBERS, AS A PERCENTAGE OF THE TOTAL NUMBER OF VENTURE CAPITAL INVEST-
MENTS THE COVERED ENTITY MADE, IN THE AGGREGATE AND BROKEN DOWN INTO THE
CATEGORIES DESCRIBED IN SUBPARAGRAPHS (I) THROUGH (VII) OF PARAGRAPH (A)
OF THIS SUBDIVISION. THE INFORMATION PROVIDED PURSUANT TO THIS PARAGRAPH
SHALL BE ANONYMIZED.
(C) DURING THE PREVIOUS CALENDAR YEAR, THE TOTAL AMOUNT OF VENTURE
CAPITAL INVESTMENTS TO BUSINESSES PRIMARILY FOUNDED BY DIVERSE FOUNDING
TEAM MEMBERS, AS A PERCENTAGE OF VENTURE CAPITAL INVESTMENTS MADE BY THE
COVERED ENTITY, IN THE AGGREGATE AND BROKEN DOWN INTO THE CATEGORIES
DESCRIBED IN SUBPARAGRAPHS (I) THROUGH (VII) OF PARAGRAPH (A) OF THIS
SUBDIVISION.
(D) THE TOTAL AMOUNT OF FUNDS IN VENTURE CAPITAL INVESTMENTS THAT THE
COVERED ENTITY INVESTED IN EACH BUSINESS DURING THE PREVIOUS CALENDAR
YEAR.
(E) THE PRINCIPAL PLACE OF BUSINESS OF EACH COMPANY IN WHICH THE
COVERED ENTITY MADE A VENTURE CAPITAL INVESTMENT DURING THE PRIOR CALEN-
DAR YEAR.
A. 5471 9
2. (A) A COVERED ENTITY SHALL FACILITATE THE COLLECTION OF INFORMATION
REQUIRED BY SUBDIVISION ONE OF THIS SECTION BY OFFERING EACH FOUNDING
TEAM MEMBER OF A BUSINESS THAT HAS RECEIVED FUNDING FROM A VENTURE CAPI-
TAL FIRM UNDER SUCH COVERED ENTITY'S ADVISORY SERVICES THE OPPORTUNITY
TO PARTAKE IN A SURVEY.
(B) THE SURVEY DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION SHALL BE
PROVIDED PURSUANT TO A STANDARDIZED FORM, AS SPECIFIED BY THE DIVISION.
SUCH SURVEY SHALL INCLUDE A "DECLINE TO STATE" OPTION FOR EACH QUESTION
ON THE SURVEY.
(C) A COVERED ENTITY SHALL PROVIDE A WRITTEN DISCLOSURE TO EACH FOUND-
ING TEAM MEMBER PRIOR TO, OR CONCURRENTLY WITH, THE SURVEY DESCRIBED IN
PARAGRAPH (A) OF THIS SUBDIVISION WHICH SHALL STATE THE FOLLOWING:
(I) THE FOUNDING TEAM MEMBER'S DECISION TO DISCLOSE THEIR DEMOGRAPHIC
INFORMATION IS VOLUNTARY.
(II) NO ADVERSE ACTION WILL BE TAKEN AGAINST THE FOUNDING TEAM MEMBER
IF THEY DECLINE TO PARTICIPATE IN THE SURVEY.
(III) THE AGGREGATE DATA COLLECTED FOR EACH DEMOGRAPHIC CATEGORY WILL
BE REPORTED TO THE DIVISION.
(D) A COVERED ENTITY SHALL NOT PROVIDE THE SURVEY DESCRIBED IN PARA-
GRAPH (A) OF THIS SUBDIVISION AND THE DISCLOSURE DESCRIBED IN PARAGRAPH
(C) OF THIS SUBDIVISION TO A FOUNDING TEAM MEMBER UNTIL AFTER SUCH
COVERED ENTITY HAS EXECUTED AN INVESTMENT AGREEMENT WITH THE BUSINESS
AND MADE THE FIRST TRANSFER OF FUNDS.
(E) NEITHER A COVERED ENTITY NOR THE DIVISION SHALL IN ANY WAY ENCOUR-
AGE, INCENTIVIZE, OR ATTEMPT TO INFLUENCE THE DECISION OF A FOUNDING
TEAM MEMBER TO PARTICIPATE IN THE SURVEY DESCRIBED IN PARAGRAPH (A) OF
THIS SUBDIVISION.
3. (A) A COVERED ENTITY REQUIRED TO CONDUCT THE SURVEY DESCRIBED IN
PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION SHALL:
(I) COLLECT SURVEY RESPONSE DATA FROM FOUNDING TEAM MEMBERS IN A
MANNER THAT DOES NOT ASSOCIATE THE SURVEY RESPONSE DATA WITH AN INDIVID-
UAL FOUNDING TEAM MEMBER; AND
(II) REPORT THE SURVEY RESPONSE DATA IN A MANNER THAT DOES NOT ASSOCI-
ATE THE SURVEY RESPONSE DATA WITH AN INDIVIDUAL FOUNDING TEAM MEMBER.
(B) A COVERED ENTITY MAY SATISFY THE REQUIREMENTS OF THIS SECTION BY
PROVIDING A REPORT PREPARED BY A BUSINESS THAT CONTROLS EACH VENTURE
CAPITAL COMPANY TO WHICH THE COVERED ENTITY ACTED AS AN INVESTMENT
ADVISER AT ANY TIME DURING THE PRIOR CALENDAR YEAR IF THE REPORT
CONTAINS ALL OF THE INFORMATION REQUIRED BY PARAGRAPH (A) OF SUBDIVISION
ONE OF THIS SECTION.
(C) THE DIVISION SHALL MAKE THE REPORTS RECEIVED PURSUANT TO THIS
SECTION READILY ACCESSIBLE, EASILY SEARCHABLE, AND EASILY DOWNLOADABLE
ON THE DIVISION'S INTERNET WEBSITE.
(D) THE DIVISION MAY PUBLISH AGGREGATE RESULTS OR AGGREGATE INFORMA-
TION BASED ON THE INFORMATION RECEIVED PURSUANT TO THIS SECTION.
(E) THE DIVISION MAY USE ANY INFORMATION COLLECTED PURSUANT TO THIS
SECTION IN FURTHERANCE OF ITS STATUTORY DUTIES, INCLUDING, BUT NOT
LIMITED TO, USING SUCH INFORMATION IN A CIVIL ACTION BROUGHT BY THE
DIVISION UNDER THIS CHAPTER OR OTHER LAW.
(F) A COVERED ENTITY SHALL MAKE AND KEEP RECORDS RELATED TO ITS OBLI-
GATIONS UNDER THIS SECTION. ALL RECORDS RELATED TO A REPORT DELIVERED TO
THE DIVISION PURSUANT TO THIS SECTION SHALL BE PRESERVED FOR AT LEAST
FOUR YEARS AFTER A COVERED ENTITY DELIVERS SUCH REPORT. THE DIVISION MAY
EXAMINE SUCH RECORDS OF A COVERED ENTITY TO DETERMINE SUCH COVERED ENTI-
TY'S COMPLIANCE WITH THE PROVISIONS OF THIS SECTION.
A. 5471 10
(G) THE DIVISION SHALL CHARGE AND COLLECT FEES FROM COVERED ENTITIES
TO COVER THE EXPENSES INCURRED IN THE ADMINISTRATION OF THIS SECTION,
WHICH SHALL NOT EXCEED THE REASONABLE COSTS OF SUCH ADMINISTRATION.
§ 328-D. REMEDIES. 1. (A) IF A COVERED ENTITY FAILS TO FILE THE REPORT
REQUIRED BY SUBDIVISION ONE OF SECTION THREE HUNDRED TWENTY-EIGHT-C OF
THIS ARTICLE BY JANUARY FIRST OF A GIVEN YEAR, THE DIVISION SHALL NOTIFY
SUCH COVERED ENTITY THAT SUCH COVERED ENTITY MUST SUBMIT SUCH REPORT
WITHIN SIXTY DAYS OF SUCH NOTIFICATION.
(B) IF A COVERED ENTITY HAS NOT SUBMITTED THE REPORT REQUIRED BY
SUBDIVISION ONE OF SECTION THREE HUNDRED TWENTY-EIGHT-C OF THIS ARTICLE
WITHIN THE SIXTY-DAY PERIOD PRESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVI-
SION, THE DIVISION MAY FILE WITH A SUPREME COURT AN EX-PARTE PETITION,
NAMING THE COVERED ENTITY AS THE RESPONDENT, SEEKING AN ORDER PROVIDING
THE FOLLOWING RELIEFS:
(I) AN ORDER COMPELLING THE RESPONDENT TO COMPLY WITH THIS SECTION.
(II) AN ORDER REQUIRING THE RESPONDENT TO PAY A PENALTY TO THE DIVI-
SION SUFFICIENT TO DETER THE RESPONDENT FROM FAILING TO COMPLY WITH THIS
ARTICLE, AS DETERMINED BY THE COURT. IN MAKING SUCH DETERMINATION, THE
COURT SHALL CONSIDER ALL RELEVANT FACTORS, INCLUDING, BUT NOT LIMITED
TO:
(A) THE SIZE OF THE RESPONDENT;
(B) THE NUMBER OF ASSETS UNDER MANAGEMENT OF THE RESPONDENT; AND
(C) THE NATURE OF THE FAILURE TO COMPLY WITH THIS SECTION.
(III) AN ORDER MANDATING THE RESPONDENT TO PAY THE DIVISION'S REASON-
ABLE ATTORNEYS' FEES AND COSTS INCURRED IN PURSUING THE ACTION.
(IV) ANY OTHER RELIEF THAT THE COURT DEEMS APPROPRIATE.
(C) THE DIVISION MAY BRING AN ACTION DESCRIBED IN PARAGRAPH (B) OF
THIS SUBDIVISION IN:
(I) ANY COUNTY IN WHICH THE DIVISION HAS A DIVISION; OR
(II) THE COUNTY OF THE RESPONDENT'S RESIDENCE OR PRINCIPAL PLACE OF
BUSINESS.
2. (A) IN AN ACTION BROUGHT PURSUANT TO SUBDIVISION ONE OF THIS
SECTION, THE SUPREME COURT SHALL HAVE JURISDICTION TO GRANT ANY OF THE
RELIEFS DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION ONE OF THIS SECTION.
(B) (I) IF A PETITION FILED BY THE DIVISION PURSUANT TO PARAGRAPH (B)
OF SUBDIVISION ONE OF THIS SECTION FAILS TO SET FORTH GOOD CAUSE FOR
RELIEF, THE COURT MAY ENTER AN ORDER DENYING SUCH PETITION.
(II) IF A PETITION FILED BY THE DIVISION PURSUANT TO PARAGRAPH (B) OF
SUBDIVISION ONE OF THIS SECTION SETS FORTH GOOD CAUSE FOR RELIEF, THE
COURT SHALL ISSUE AN ORDER TO SHOW CAUSE TO THE RESPONDENT.
(C) THE DIVISION SHALL SERVE THE PETITION AND THE ORDER TO SHOW CAUSE
ON THE RESPONDENT IN ANY MANNER WITHIN TEN DAYS OF THE ISSUANCE OF THE
ORDER. THE RESPONDENT SHALL FILE A RESPONSE TO THE PETITION AND THE
ORDER TO SHOW CAUSE WITHIN TWENTY-ONE DAYS OF SERVICE.
(D) (I) THE RESPONDENT HAS THE OPTION TO REQUEST A HEARING ON THE
PETITION AND ORDER TO SHOW CAUSE AS PART OF THEIR RESPONSE.
(II) WITHIN SEVEN DAYS OF RECEIVING THE RESPONDENT'S RESPONSE, THE
DIVISION MAY SUBMIT A REQUEST FOR A HEARING.
(E) (I) THE COURT, EITHER AT ITS DISCRETION OR UPON REQUEST PURSUANT
TO PARAGRAPH (D) OF THIS SUBDIVISION, MAY CONDUCT A HEARING ON THE PETI-
TION AND ORDER TO SHOW CAUSE. THE COURT SHALL SCHEDULE SUCH HEARING
WITHIN THIRTY DAYS OF THE RESPONDENT'S RESPONSE AND ISSUE AN ORDER
GRANTING OR DENYING THE PETITION WITHIN THIRTY DAYS OF SUCH HEARING.
(II) IF NO HEARING IS CONVENED, THE COURT SHALL ISSUE AN ORDER GRANT-
ING OR DENYING THE PETITION WITHIN THIRTY DAYS OF RECEIVING THE RESPOND-
ENT'S RESPONSE OR FOLLOWING THE EXPIRATION OF THE RESPONDENT'S TWENTY-
A. 5471 11
ONE DAY RESPONSE WINDOW, WHICHEVER IS EARLIER, UNLESS OTHERWISE AGREED
UPON BY THE PARTIES.
(III) THE COURT MAY, ON ITS OWN MOTION AND FOR GOOD CAUSE, EXTEND ANY
TIME PERIOD DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH BY THIRTY
DAYS.
(F) (I) THE DIVISION SHALL SERVE ON THE RESPONDENT A COPY OF THE
COURT'S ORDER GRANTING OR DENYING THE PETITION IN ANY MANNER WITHIN TEN
DAYS OF ISSUANCE OF SUCH ORDER.
(II) IF THE COURT GRANTS THE PETITION IN WHOLE OR IN PART, THE ORDER
SHALL:
(A) SET FORTH THE MANNER AND TIME PERIOD IN WHICH THE RESPONDENT SHALL
COMPLY WITH THE PROVISIONS OF THIS SECTION; AND
(B) BECOME EFFECTIVE TEN DAYS AFTER IT IS SERVED.
(III) IF THE ORDER DENIES THE PETITION, SUCH ORDER SHALL BECOME EFFEC-
TIVE ON THE DATE IT IS SERVED.
(G) THE ORDER OF THE SUPREME COURT SHALL BE FINAL AND, EXCEPT AS
PROVIDED FOR BY THIS PARAGRAPH, NOT SUBJECT TO REVIEW BY APPEAL. A PARTY
AGGRIEVED BY THE ORDER, OR ANY PART OF SUCH ORDER, MAY, WITHIN FIFTEEN
DAYS AFTER THE SERVICE OF SUCH ORDER, SERVE AND FILE, IN THE APPROPRIATE
COURT OF CORRESPONDING JURISDICTION, A PETITION FOR A WRIT OF MANDAMUS
TO COMPEL THE SUPREME COURT TO SET ASIDE OR OTHERWISE MODIFY SUCH ORDER.
(H) MONETARY AWARDS OR JUDGMENTS COLLECTED PURSUANT TO THIS SECTION
SHALL BE DEPOSITED IN THE NEW YORK STATE WORKFORCE DEVELOPMENT CAPITAL
GRANT PROGRAM.
§ 3. This act shall take effect immediately.
§ 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would have been enacted even if such
invalid provisions had not been included herein.
§ 3. This act shall take effect immediately; provided, however, that
the applicable effective date of Parts A through C of this act shall be
as specifically set forth in the last section of such Parts.