What's happening
Writing a plain-English summary… Track this bill to get it by email.
Why it matters
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- Delivered to assembly
- Passed senateVote 60–0
- Advanced to third reading
- 2nd report cal.
- 1st report cal.100
- Referred to insurance
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.509
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Relates to the investments and activities of insurance department employees
In Assembly Committee · Insurance · Sponsor Joseph Morelle
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to investments and activities of insurance department employees
Purpose or general idea of bill
This bill would permit employees of the Insurance Department to own shares of a mutual fund that may incidentally invest in the stock of a licensee of the Department. Ownership of shares in mutual funds that invest primarily or exclusively in the shares of licensees of the Insurance Department would be prohibited.
Summary of provisions
Section 1 of the bill amends subsection (a) of Section 204 of the Insurance law to specify that the prohibition against ownership of securities or investments in licensees of the Insurance Department by Department employees is not applicable to investments in mutual investment companies (mutual funds) that my incidentally invest in the stock of a licensee of the Department An exception is provided for mutual funds that are designed to invest primarily or exclusively in the shares of licensees of the Department.
Read the full memo (702 words)
Section 2. Effective Date.
Justification
Section 204 of the Insurance Law was designed to ensure that the Department and its employees regulate the insurance industry in a disinterested and ethical manner. As a general matter, the statute continues to serve the legislative purposes underpinning its predecessor's enactment nearly one hundred and fifty years ago when the Insurance Department was first established, which include precluding not only impropriety but also the appearance of impropriety. Significant changes in the financial world and the nature of investments since the statute's reenactment in 1939 have raised questions as to the reach of Section 204.
The growth of mutual funds exemplifies the changes in the economic landscape. The first mutual fund, established in 1924, served around 200 investors and managed $392,000 in assets. By contrast, the Investment Company Institute in April 2007 estimated that over 8,800 mutual funds exist, serving 93.9 million individual shareholders nationwide and managing over $10.4 trillion in investor assets.
At the same time, even since Section 204 was last re-codified in 1984 (without substantive change) there has been significant horizontal and vertical integration of financial services and other companies. In 1999, when Congress passed the Gramm-Leach-Bliley Act, it repealed major provisions of the Glass-Steagall Act, which had prohibited commercial banks from also offering certain specific investment or insurance services. By ratifying a trend that was already emerging in the market, namely, the banking industry's push to offer customers a wider range of financial services, the Gramm-Leach-Bliley Act paved the way for the emergence of "financial supermarkets.: For example, in 2000, Citigroup, Inc. had holdings in the banking sector (Citibank), investment brokerage sector (Smith Barney), and insurance industry (Travelers), among others. Other market changes at the same time allowed corporations, like auto manufacturers, to vertically integrate, and thereby own or control the members of their supply chain, which could include insurers licensed by this Department.
Section 204 was not intended to prohibit passive investment in investment companies that incidentally own a securities of insurance companies or in securities of issuers that own licensees with insurance operations that are not material to the business of the issuers taken as a whole. Accordingly, this bill amends Section 204 in a reasonable manner that maintains the statutory intent.
The bill also provides an important safeguard in that it prohibits employees of the Insurance Department from investing in mutual funds that are designed to primarily or exclusively invest in the securities of licensees of the Department. Specialty funds, sometimes call "Sector Funds," may be designed to invest primarily in life insurance companies. An investment in such a fund by a Department employee would be prohibited by this bill.
Finally, Section 16(3)(d) of the New York State banking law as amended by Chapter 318 of the laws of 1995 to make changes similar to this bill for employees of the Banking Department. The employees of the two agencies should be treated in a a similar matter, and this bill accomplishes that goals.
Prior legislative history
A similar bill was introduced in 2008. The bill S.7609 passed the Senate.
Fiscal implications
None.
Effective date
This bill would take effect immediately after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.