What's happening
The Institutional Investor Recovery Act allows certain public retirement systems and Taft-Hartley plans to sue for damages from securities fraud.
Why it matters
Empowers large public pension funds and Taft-Hartley plans. to directly sue for securities fraud losses, increasing their leverage and ability to recover funds lost due to corporate misconduct or financial deception.
Excludes smaller plans (under 100 beneficiaries). from bringing these actions, focusing legal remedies on larger institutions that represent significant groups of workers and retirees.
Establishes a six-year window. for these institutions to file suit after they discover (or reasonably should have discovered) the fraudulent act, which may allow for more claims to be brought compared to shorter statutes of limitations.
Prevents automatic delays in evidence disclosure. when defendants file motions to dismiss, likely making it harder for alleged fraudsters to stall cases and potentially accelerating the litigation process.
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Who cares
Headline styles
Let Pension Funds Sue for Fraud
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
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 Assembly Committee · Codes · Sponsor Felix Ortiz
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3050
2019-2020 Regular Sessions
IN SENATE
February 1, 2019
Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to enacting the "institutional investor recovery act"
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Short title. This act shall be known and may be cited as the "institutional investor recovery act".
§ 2. The general business law is amended by adding a new section 353-b to read as follows:
§ 353-b. Action by certain public retirement systems and multi-employer health and welfare retirement plans organized under the Taft-Hartley act. (a) Any public retirement system as defined in subdivision twenty-three of section five hundred one of the retirement and social security law, or any multi-employer health and welfare retirement plan organized under the Taft-Hartley act and 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 this article, may bring an action for damages against any person, partnership, corporation, company, limited liability company, trust, or association that committed, aided or abetted or in any way participated in the commission of such prohibited act.
(b) No public retirement system or multi-employer health and welfare retirement plans organized under the Taft-Hartley act that had fewer than one hundred beneficiaries at the time of the purchase or sale of the security may bring an action under this section.
(c) 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.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09160-01-9
S. 3050 2
(d) 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.
§ 3. Section 353 of the general business law is amended by adding a new subdivision 5 to read as follows:
5. Nothing in this article shall preempt any purchaser or seller of securities or commodities from bringing any common law claims concerning any alleged deception, misrepresentation, concealment, suppression, fraud, false pretense or false promise made in connection with the sale or purchase of such securities or commodities as described in section three hundred fifty-two of this article.
§ 4. 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.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to enacting the "institutional investor recovery act"
Purpose
This bill would authorize public pension funds and Taft Hartley pension funds to bring actions for damages resulting from violations of the state's Martin Act.
Summary of provisions
Section 1 names the bill the "institutional investor recovery act."
Section 2 amends the general business law by adding a new section 353-b to allow public retirement systems and multi-employer health and welfare plans to bring an action for damages against an entity that committed, aided or abetted or participated in securities fraud under the Martin Act within six years from discovering the alleged prohibited act.
Section 3 amends section 353 of the general business law to add a new subdivision 4 clarifying that nothing in the act will preempt any purchaser or seller of securities from bringing any common law claims concerning alleged deceptions made in a securities or commodities trans- action.
Section 4 provides for the act to take effect immediately and apply to causes of action accruing and actions pending before, on, or after the effective date.
Existing law
New Law
Justification
Public pension funds and private sector multi-employer health and welfare plans have found themselves without remedy for damages and massive losses due to violations of state securities laws. Under current law, the state attorney general has broad powers to prosecute fraudulent securities practices, yet investors have no such right under the state's securities laws, making New York only one of two states without such remedy.
While investors may assert damage claims in federal court for violations of federal securities law, such claims are highly restrictive in both substance and procedure, extinguishing many otherwise valid claims of wrongdoing. Investors should have the right to bring claims on their own behalf under New York's securities law.
Legislative history
New to Senate 2011/12: A6060A referred to Codes 2013/14: A7282 Referred to Codes 2015/2016: A5946 Referred to Codes
Fiscal implications
To be determined
Local fiscal implications
To be determined
Effective date
This act shall take effect immediately and apply to causes of action accruing and actions pending before, on, or after the effective date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.