Relates to the attorney general's investigation and commencement of actions relating to fraudulent practices alleged to have damaged a public retirement system.
TITLE OF BILL: An act to amend the retirement and social security law and the general business law, in relation to the attorney general's investigation and commencement of actions relating to fraudulent practices alleged to have damaged a public retirement system
PURPOSE: This bill would require the Attorney General to investigate and where appropriate to commence a civil action to recover damages suffered by New York public retirement systems as a result of securities fraud.
SUMMARY OF PROVISIONS: Section 1 amends the retirement and social security law to require the Attorney General to investigate and where appropriate pursue allegations of securities fraud upon the request of the New York State and Local Employees Retirement System and the police and Fire Retirement System.
Section 2 amends the general business law (Martin Act) by adding a new section 353-b (3) to accomplish 41 above for all public retirement systems. The bill provides for reimbursement to the Attorney General from the public retirement system of reasonable investigation and litigation costs.
Section 3 provides that the bill applies to fraudulent actions or omissions that occurred after January 1, 2003.
JUSTIFICATION: Shockingly, there is no standing for the Attorney General or the public retirement systems themselves to bring an action for securities fraud under the NYS Martin Act. This is so despite the fact that these funds together hold over $250 billion in public funds. From 2007 to 2009 the net asset value of these funds declined by over $100 billion largely because of the now well documented securities fraud that led to the greatest financial calamity since the Great Depression. As a result, public pension benefits are subject to cuts for new hires and public employer pension contributions have escalated dramatically.
According to a report of the NYC Comptroller, about half of this employer contribution increase is due to the asset value losses during this short time period. To the extent that this asset value loss was caused by securities fraud, this money should be recovered before pension benefits are materially cut for new hires.
LEGISLATIVE HISTORY: S.7465 - Referred to Civil Service and Pensions
FISCAL IMPLICATIONS: None.
The act to take effect immediately and apply to causes accruing and actions pending before, on, or after January 1, 2003.
STATE OF NEW YORK ________________________________________________________________________ 965 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________Introduced by Sen. LIBOUS -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT to amend the retirement and social security law and the general business law, in relation to the attorney general's investigation and commencement of actions relating to fraudulent practices alleged to have damaged a public retirement system THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 14 of the retirement and social security law is amended to read as follows: S 14. Legal adviser. The attorney-general of the state shall be the legal adviser of the retirement system AND SHALL RECEIVE REQUESTS FOR INVESTIGATION AND LITIGATION PURSUANT TO SECTION THREE HUNDRED FIFTY-THREE OF THE GENERAL BUSINESS LAW. S 2. Subdivision 3 of section 353 of the general business law, as added by chapter 559 of the laws of 1976, is amended to read as follows: 3. (A) Upon a showing by the attorney general that a fraudulent prac- tice as defined by this article has occurred, he may include in an action under this article an application to direct restitution of any moneys or property obtained directly or indirectly by any such fraudu- lent practice, PROVIDED HOWEVER, THAT UPON THE WRITTEN REQUEST OF THE TRUSTEE OF THE NEW YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM, THE NEW YORK STATE AND LOCAL POLICE AND FIRE RETIREMENT SYSTEM OR THE TRUSTEE OF ANY OTHER PUBLIC RETIREMENT SYSTEM AS DEFINED IN SUBDIVISION A OF SECTION EIGHT HUNDRED OF THE RETIREMENT AND SOCIAL SECURITY LAW, ALLEGING THAT SUCH PUBLIC RETIREMENT SYSTEM HAS BEEN DAMAGED BY SUCH FRAUDULENT PRACTICES, THE ATTORNEY GENERAL SHALL, WITHIN A REASONABLE TIME PERIOD, INVESTIGATE THE FACTS ALLEGED IN THE REQUEST AND, WHERE APPROPRIATE, COMMENCE AN ACTION UNDER THIS ARTICLE FOR RESTITUTION TO SUCH PUBLIC RETIREMENT SYSTEM OF ANY MONEYS OR PROPERTY OBTAINED DIRECT-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05295-01-3 S. 965 2
LY OR INDIRECTLY BY ANY SUCH FRAUDULENT PRACTICE. ANY FINAL JUDGMENT OR SETTLEMENT WHICH PROVIDES FOR SUCH RESTITUTION OF MONEY OR PROPERTY SHALL BE TIMELY REMITTED TO THE AFFECTED PUBLIC RETIREMENT SYSTEM. (B) WHERE A REQUEST IS MADE TO THE ATTORNEY GENERAL BY A PUBLIC RETIREMENT SYSTEM TRUSTEE OR TRUSTEES PURSUANT TO PARAGRAPH (A) OF THIS SUBDIVISION, SUCH PUBLIC RETIREMENT SYSTEM SHALL REIMBURSE THE ATTORNEY GENERAL FOR REASONABLE INVESTIGATION, LITIGATION, COURT FEE, EXPERT WITNESS AND OTHER REASONABLE RELATED COSTS. S 3. This act shall take effect immediately and shall apply to actions or omissions committed on or after January 1, 2003.