A04355 Summary:
BILL NO | A04355 |
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SAME AS | SAME AS S01022 |
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SPONSOR | Weprin (MS) |
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COSPNSR | |
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MLTSPNSR | Abinanti, Bronson, Colton, Jaffee, Lifton, Perry, Rivera |
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Add §631, BC L; ren §179-a to be §179-b, add §179-a, R & SS L | |
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Authorizes a public retirement system, as defined in section 501 of the retirement and social security law, mutual fund, or other institutional investor to bring actions for damages sustained due to the commission of certain prohibited and criminal acts in violation of the Martin Act (Fraudulent Practice in Respect to Stocks, Bonds and other Securities). |
A04355 Memo:
Go to topNEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)   BILL NUMBER: A4355 SPONSOR: Weprin (MS)
  TITLE OF BILL: An act to amend the business corporation law and the retirement and social security law, in relation to authorizing certain actions by institutional investors   PURPOSE OR GENERAL IDEA: This bill would provide authority to large Institutional investors, including the state's pension fund to bring actions for damages result- ing from violations of the State's securities laws.   SUMMARY OF SPECIFIC PROVISIONS: Amends the BCL and R&SS Law to allow mutual funds and institutional investors, and the state retirement fund to bring an action for damages as a result of violating state securities laws.   JUSTIFICATION: As a result of recent corporate wrongdoings, trustees of large institu- tional investors such as mutual funds or the State's pension fund, have found themselves without remedy for damages and massive losses due to corporate violations of state securities laws. Under current law, the State attorney general has broad powers to prevent fraudulent securities practices, yet large institutional investors have no right of action when the state's securities laws are violated, because New York is only one or two states without such remedy. This bill only furthers the purposes of the Martin Act which are to deter fraudulent practices in the sale of securities and protect investors thereof. Investors, under current federal law, may make damage claims in federal court under the Private Securities Litigation Reform Act, but no such avenue exists for state securities laws. By bringing action in State court, large institutional investors can have an appropriate avenue to bring damage claims against corporations established themselves by state law. The amended version of this bill incorporates the recommendations of the Comptroller of the State of New York, the sole trustee of the State's pension fund, who fully supports the legislation.   PRIOR LEGISLATIVE HISTORY: 02/09/17 referred to governmental employees 01/03/18 referred to governmental employees   FISCAL IMPLICATION FOR-STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: Immediately
A04355 Text:
Go to top STATE OF NEW YORK ________________________________________________________________________ 4355 2019-2020 Regular Sessions IN ASSEMBLY February 4, 2019 ___________ 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 Assem- bly, do enact as follows: 1 Section 1. The business corporation law is amended by adding a new 2 section 631 to read as follows: 3 § 631. Action by certain mutual funds and other institutional investors. 4 (a) Any mutual fund or other institutional investor incorporated under 5 the laws of this state or which maintains its principal place of busi- 6 ness in this state, that is damaged in connection with the purchase or 7 sale of a security as a result of the commission of any act prohibited 8 by section three hundred fifty-two-c of the general business law, may 9 bring an action for damages against any person, partnership, corpo- 10 ration, company, limited liability company, trust, or association that 11 committed or participated in the commission of such prohibited act. 12 (b) No mutual fund or other institutional investor that had fewer than 13 five hundred beneficiaries at the time of the purchase or sale of the 14 security may bring an action under this section. 15 (c) With respect to allegations that a representation or statement was 16 false, the plaintiff with respect to allegations required to plead and 17 prove that the person who made such statement: (i) knew the truth; (ii) 18 with reasonable effort could have known the truth; (iii) made no reason- 19 able effort to ascertain the truth; or (iv) did not have knowledge 20 concerning the representation or statement made. With respect to allega- 21 tions of any other nature, the plaintiff is required to plead and prove 22 that the person acted with negligence. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06775-01-9A. 4355 2 1 (d) No such action may be brought more than six years from the time 2 the plaintiff discovered the allegedly prohibited act or could, with 3 reasonable diligence, have discovered it. 4 (e) After such action has been brought, notwithstanding any provision 5 of law to the contrary, disclosure and related proceedings shall not be 6 stayed during the pendency of any motion to dismiss, unless the court so 7 directs. 8 § 2. Section 179-a of the retirement and social security law, as 9 renumbered by chapter 868 of the laws of 1975, is renumbered section 10 179-b and a new section 179-a is added to read as follows: 11 § 179-a. Action by certain public pension plan or fund or retirement 12 system investors. 1. A public retirement system as defined in subdivi- 13 sion twenty-three of section five hundred one of this chapter, that is 14 damaged in connection with the purchase or sale of a security as a 15 result of the commission of any act prohibited by section three hundred 16 fifty-two-c of the general business law, may bring an action for damages 17 against any person, partnership, corporation, company, limited liability 18 company, trust, or association that committed or participated in the 19 commission of such prohibited act. 20 2. No such public pension plan or fund or retirement system investor 21 that had fewer than five hundred beneficiaries at the time of the 22 purchase or sale of the security may bring an action under this section. 23 3. With respect to allegations that a representation or statement was 24 false, the plaintiff is required to plead and prove that the person who 25 made such statement: (a) knew the truth; (b) with reasonable effort 26 could have known the truth; (c) made no reasonable effort to ascertain 27 the truth; or (d) did not have knowledge concerning the representation 28 or statement made. With respect to allegations of any other nature, the 29 plaintiff is required to plead and prove that the person acted with 30 negligence. 31 4. No such action may be brought more than six years from the time the 32 plaintiff discovered the allegedly prohibited act or could, with reason- 33 able diligence, have discovered it. 34 5. After such action has been brought, notwithstanding any provision 35 of law to the contrary, disclosure and related proceedings shall not be 36 stayed during the pendancy of any motion to dismiss, unless the court so 37 directs. 38 § 3. This act shall take effect immediately and shall apply to causes 39 of action accruing and actions pending before, on, or after its effec- 40 tive date.