What's happening
This bill allows large New York-based mutual funds and public pension systems to sue for damages from securities fraud under state law.
Why it matters
Empowers large New York-based mutual funds and public pension systems. (with at least 500 beneficiaries) to seek damages under state law for securities fraud, giving them a new tool beyond federal remedies and potentially increasing accountability for fraudulent actors.
Sets a lower threshold for proving liability than federal law. by allowing claims based on negligence (not just intentional fraud), which could make it easier for these institutional investors to recover losses from securities fraud.
Removes automatic delays in discovery when motions to dismiss are filed. , enabling plaintiffs to access evidence earlier in the litigation process and potentially strengthening their cases.
Applies retroactively as well as going forward. , meaning current and even some past cases of alleged securities fraud could be pursued under these new provisions, potentially resulting in more and larger lawsuits against those accused of misleading large New York-based investors.
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Who cares
Headline styles
Let Pension Funds Sue Fraudsters
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to governmental employees
- Referred to governmental employees
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.
Let Pension Funds Sue Fraud
In Senate Committee · Corporations, Authorities And Commissions · Sponsor Gustavo Rivera
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5439
2017-2018 Regular Sessions
IN ASSEMBLY
February 9, 2017
Introduced by M. of A. WEPRIN -- Multi-Sponsored by -- M. of A. ABINAN- TI, BRONSON, COLTON, JAFFEE, LIFTON, PERRY, RIVERA -- read once and referred to the Committee on Governmental Employees
AN ACT to amend the business corporation law and the retirement and social security law, in relation to authorizing certain actions by institutional investors
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The business corporation law is amended by adding a new section 631 to read as follows: § 631. Action by certain mutual funds and other institutional investors.
(a) Any mutual fund or other institutional investor incorporated under the laws of this state or which maintains its principal place of business in this state, that is damaged in connection with the purchase or sale of a security as a result of the commission of any act prohibited by section three hundred fifty-two-c of the general business law, may bring an action for damages against any person, partnership, corporation, company, limited liability company, trust, or association that committed or participated in the commission of such prohibited act.
(b) No mutual fund or other institutional investor that had fewer than five hundred beneficiaries at the time of the purchase or sale of the security may bring an action under this section.
(c) With respect to allegations that a representation or statement was false, the plaintiff with respect to allegations required to plead and prove that the person who made such statement: (i) knew the truth; (ii) with reasonable effort could have known the truth; (iii) made no reasonable effort to ascertain the truth; or (iv) did not have knowledge concerning the representation or statement made. With respect to allegations of any other nature, the plaintiff is required to plead and prove that the person acted with negligence.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02116-01-7
A. 5439 2
(d) No such action may be brought more than six years from the time the plaintiff discovered the allegedly prohibited act or could, with reasonable diligence, have discovered it.
(e) After such action has been brought, notwithstanding any provision of law to the contrary, disclosure and related proceedings shall not be stayed during the pendency of any motion to dismiss, unless the court so directs.
§ 2. Section 179-a of the retirement and social security law, as renumbered by chapter 868 of the laws of 1975, is renumbered section 179-b and a new section 179-a is added to read as follows:
§ 179-a. Action by certain public pension plan or fund or retirement system investors. 1. A public retirement system as defined in subdivision twenty-three of section five hundred one of this chapter, that is damaged in connection with the purchase or sale of a security as a result of the commission of any act prohibited by section three hundred fifty-two-c of the general business law, may bring an action for damages against any person, partnership, corporation, company, limited liability company, trust, or association that committed or participated in the commission of such prohibited act.
2. No such public pension plan or fund or retirement system investor that had fewer than five hundred beneficiaries at the time of the purchase or sale of the security may bring an action under this section.
3. With respect to allegations that a representation or statement was false, the plaintiff is required to plead and prove that the person who made such statement: (a) knew the truth; (b) with reasonable effort could have known the truth; (c) made no reasonable effort to ascertain the truth; or (d) did not have knowledge concerning the representation or statement made. With respect to allegations of any other nature, the plaintiff is required to plead and prove that the person acted with negligence.
4. No such action may be brought more than six years from the time the plaintiff discovered the allegedly prohibited act or could, with reasonable diligence, have discovered it.
5. After such action has been brought, notwithstanding any provision of law to the contrary, disclosure and related proceedings shall not be stayed during the pendancy of any motion to dismiss, unless the court so directs.
§ 3. This act shall take effect immediately and shall apply to causes of action accruing and actions pending before, on, or after its effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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