What's happening
This bill requires non-fiduciary investment advisors in New York to clearly disclose their non-fiduciary status to clients.
Why it matters
Empowers consumers to make informed decisions. by requiring clear, standardized disclosures, helping clients understand when their advisor is not legally obligated to act in their best interest (i.e., not a fiduciary), which can impact the quality and objectivity of advice received.
Targets potentially misleading industry titles. by mandating disclosures from anyone using terms like "advisor," "consultant," or "planner," closing loopholes where non-fiduciary actors might present themselves as trusted professionals without being held to fiduciary standards.
Creates enforceable legal consequences. by authorizing the Attorney General to impose civil penalties (up to $5,000 per violation), providing real deterrence against non-compliance and giving the law practical teeth.
Clarifies mixed-standard relationships. by requiring advisors who are fiduciaries in some contexts but not others to specify, in writing, exactly when the fiduciary standard applies, reducing confusion for consumers who might otherwise assume full fiduciary protection.
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Who cares
Headline styles
Disclose Investment Advisor Status
Plain English, a few words. Used as the page title.
Sponsors
13 Co-sponsors
3 Multi-sponsors
History
- Referred to codes
- Print number 2476a
- Amend and recommit to codes
- Reported referred to codes
- Referred to judiciary
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.
Require Investment Advisor Disclosures
In Senate Committee · Judiciary · Sponsor Brad Hoylman-Sigal
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2476--A
2019-2020 Regular Sessions
IN ASSEMBLY
January 22, 2019
Introduced by M. of A. DINOWITZ, GOTTFRIED, ORTIZ, STECK, PICHARDO, MOSLEY, BLAKE, SEAWRIGHT, BICHOTTE, COOK, COLTON, GALEF, BUCHWALD -- Multi-Sponsored by -- M. of A. DAVILA, GLICK, SIMON -- read once and referred to the Committee on Judiciary -- reported and referred to the Committee on Codes -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the general obligations law, in relation to mandating greater levels of disclosure by non-fiduciaries that provide investment advice
The People of the State of New York, represented in Senate and Assembly, 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 professional conduct, and may include, but not be limited to individuals and institutions that identify themselves to consumers as "brokers," "dealers," "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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00750-05-9
A. 2476--A 2
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 required disclosure shall state the following: "A non-fiduciary investment 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 disclosure 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 professional 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 succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.