Enacts the "institutional investor recovery act"; relates to an action by certain public retirement systems or multi-employer health and welfare plans organized under the Taft-Hartley act.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6242
SPONSOR: Ortiz
 
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.
 
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:
2011/12: A6060A referred to Codes
2013/14: A7282 Referred to Codes
2015/2016: A5946 Referred to Codes
 
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.
STATE OF NEW YORK
________________________________________________________________________
6242
2017-2018 Regular Sessions
IN ASSEMBLY
March 1, 2017
___________
Introduced by M. of A. ORTIZ -- read once and referred to the Committee
on Codes
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 Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "institutional investor recovery act".
3 § 2. The general business law is amended by adding a new section 353-b
4 to read as follows:
5 § 353-b. Action by certain public retirement systems and multi-employ-
6 er health and welfare retirement plans organized under the Taft-Hartley
7 act. (a) Any public retirement system as defined in subdivision twen-
8 ty-three of section five hundred one of the retirement and social secu-
9 rity law, or any multi-employer health and welfare retirement plan
10 organized under the Taft-Hartley act and incorporated under the laws of
11 this state or which maintains its principal place of business in this
12 state, that is damaged in connection with the purchase or sale of a
13 security as a result of the commission of any act prohibited by section
14 three hundred fifty-two-c of this article, may bring an action for
15 damages against any person, partnership, corporation, company, limited
16 liability company, trust, or association that committed, aided or abet-
17 ted or in any way participated in the commission of such prohibited act.
18 (b) No public retirement system or multi-employer health and welfare
19 retirement plans organized under the Taft-Hartley act that had fewer
20 than one hundred beneficiaries at the time of the purchase or sale of
21 the security may bring an action under this section.
22 (c) No such action may be brought more than six years from the time
23 the plaintiff discovered the allegedly prohibited act or could, with
24 reasonable diligence, have discovered it.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07805-01-7
A. 6242 2
1 (d) After such action has been brought, notwithstanding any provision
2 of law to the contrary, disclosure and related proceedings shall not be
3 stayed during the pendency of any motion to dismiss, unless the court so
4 directs.
5 § 3. Section 353 of the general business law is amended by adding a
6 new subdivision 5 to read as follows:
7 5. Nothing in this article shall preempt any purchaser or seller of
8 securities or commodities from bringing any common law claims concerning
9 any alleged deception, misrepresentation, concealment, suppression,
10 fraud, false pretense or false promise made in connection with the sale
11 or purchase of such securities or commodities as described in section
12 three hundred fifty-two of this article.
13 § 4. This act shall take effect immediately and shall apply to causes
14 of action accruing and actions pending before, on, or after its effec-
15 tive date.