S T A T E O F N E W Y O R K ________________________________________________________________________ 2872--B Cal. No. 265 1997-1998 Regular Sessions I N S E N A T E February 25, 1997 ___________ Introduced by Sens. ALESI, LIBOUS, KUHL, LEIBELL -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported favorably from said committee to third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the general business law, the civil practice law and rules and the banking law, in relation to addressing the issue of investment fraud restitution and providing for the repeal of certain provisions of the civil practice law and rules and the banking law upon expiration thereof The People of the State of New York, represented in Senate and Assem- ______________________________________________________________________ bly, do enact as follows: _________________________ 1 Section 1. Subdivision 4 of section 352-e of the general business law, 2 as added by chapter 987 of the laws of 1960, is amended to read as 3 follows: 4 4. (a) In all literature employed in the offer and sale of securities ___ 5 defined in subdivision one of this section and in all advertising in 6 connection therewith there shall be contained, in easily readable print 7 on the face thereof, a statement that the filing of an offering state- 8 ment or statements or prospectus as required by subdivision one of this 9 section with the department of law does not constitute approval of, or ____ 10 the endorsement of, the issue or the sale [thereof] of such securities ___________________ ____________________ 11 by the department of law or the attorney general of this state. 12 (b) No person, partnership, corporation, company, trust or associ- ______________________________________________________________________ 13 ation, or any agent or employee thereof shall in any way represent that ________________________________________________________________________ 14 a filing with the department of law, of an offering statement or state- ________________________________________________________________________ 15 ments or prospectus for the issue or sale of securities as required by ________________________________________________________________________ 16 subdivision one of this section, constitutes the approval of, or the ________________________________________________________________________ 17 endorsement of, such issue or sale by the department of law or the ________________________________________________________________________ 18 attorney general of this state. Any person, partnership, corporation, ________________________________________________________________________ EXPLANATION--Matter in italics (underscored) is new; matter in brackets _______ [ ] is old law to be omitted. LBD05626-09-7 S. 2872--B 2 1 company, trust or association, or any agent or employee thereof, that ________________________________________________________________________ 2 makes such a representation for the purpose of inducing or promoting a ________________________________________________________________________ 3 person to purchase, distribute, exchange, sell, or negotiate such secu- ________________________________________________________________________ 4 rities shall be guilty of a class A misdemeanor. ________________________________________________ 5  2. The civil practice law and rules is amended by adding a new 6 section 219 to read as follows: 7  219. Limitation of certain actions concerning investment fraud. 1. ______________________________________________________________________ 8 Any action brought by a private party or parties pleading liability ________________________________________________________________________ 9 arising from fraud, contract, or tort, with respect to the sale or ________________________________________________________________________ 10 purchase of an interest in real property located in the states of ________________________________________________________________________ 11 Tennessee, Kentucky or Missouri, or any securities relating to the same ________________________________________________________________________ 12 as defined in article twenty-three-A of the general business law, when ________________________________________________________________________ 13 such sale or purchase occurred between nineteen hundred eighty-five and ________________________________________________________________________ 14 nineteen hundred ninety, shall be commenced within thirteen years of the ________________________________________________________________________ 15 date of such sale or purchase. ______________________________ 16 2. A judicial determination made in an action pleading liability aris- ______________________________________________________________________ 17 ing from fraud, contract, or tort, with respect to the sale or purchase ________________________________________________________________________ 18 of an interest in real property located in the states of Tennessee, ________________________________________________________________________ 19 Kentucky or Missouri, or any securities relating to the same as defined ________________________________________________________________________ 20 in article twenty-three-A of the general business law, when such sale or ________________________________________________________________________ 21 purchase occurred between nineteen hundred eighty-five and nineteen ________________________________________________________________________ 22 hundred ninety and such action was commenced before nineteen hundred ________________________________________________________________________ 23 ninety-five, shall not be used by any subsequent court of record in New ________________________________________________________________________ 24 York as claim preclusion or issue preclusion pursuant to the doctrines ________________________________________________________________________ 25 of res judicata or collateral estoppel in any subsequently brought ________________________________________________________________________ 26 action pleading liability arising from fraud, contract, or tort, with ________________________________________________________________________ 27 respect to the sale or purchase of an interest in real property located ________________________________________________________________________ 28 in the states of Tennessee, Kentucky or Missouri, or any securities ________________________________________________________________________ 29 relating to the same as defined in article twenty-three-A of the general ________________________________________________________________________ 30 business law, when such purchase occurred between nineteen hundred ________________________________________________________________________ 31 eighty-five and nineteen hundred ninety. ________________________________________ 32 3. Any action brought by the attorney general pursuant to article ______________________________________________________________________ 33 twenty-three-A of the general business law, with respect to the sale or ________________________________________________________________________ 34 purchase of an interest in real property located in the states of ________________________________________________________________________ 35 Tennessee, Kentucky or Missouri, or any securities relating to the same ________________________________________________________________________ 36 as defined in article twenty-three-A of the general business law, when ________________________________________________________________________ 37 such sale or purchase occurred between nineteen hundred eighty-five and ________________________________________________________________________ 38 nineteen hundred ninety, shall be commenced within thirteen years of the ________________________________________________________________________ 39 date of the last such sale or purchase. _______________________________________ 40  3. The banking law is amended by adding a new section 103-a to read 41 as follows: 42  103-a. Limitations on certain recourse loans. Notwithstanding any ______________________________________________________________________ 43 other provision of law, any loan, mortgage, note, or instrument of ________________________________________________________________________ 44 indebtedness secured by an interest in real property located in the ________________________________________________________________________ 45 states of Tennessee, Kentucky or Missouri, or by securities relating to ________________________________________________________________________ 46 the same as defined in article twenty-three-A of the general business ________________________________________________________________________ 47 law, executed as a recourse loan, mortgage, note or instrument of ________________________________________________________________________ 48 indebtedness upon the purchase of such real property or securities ________________________________________________________________________ 49 between nineteen hundred eighty-five and nineteen hundred ninety, ________________________________________________________________________ 50 regardless of the text of the loan, mortgage, note, or instrument of ________________________________________________________________________ 51 indebtedness, shall be deemed fraudulent and void with respect to the ________________________________________________________________________ 52 recourse provisions, and such loan, mortgage, note, or instrument of ________________________________________________________________________ 53 indebtedness shall be deemed only to be a valid nonrecourse loan, mort- ________________________________________________________________________ 54 gage, note or instrument of indebtedness, if a representation that the ________________________________________________________________________ 55 loan would be a nonrecourse loan, mortgage, note, or instrument of ________________________________________________________________________ 56 indebtedness, was made to the obligor, by any person, partnership, ________________________________________________________________________ S. 2872--B 3 1 corporation, company, trust or association, or any agent or employee ________________________________________________________________________ 2 thereof, promoting, facilitating, or inducing the obligor to purchase an ________________________________________________________________________ 3 interest in such real property, or in securities relating to the same as ________________________________________________________________________ 4 defined in article twenty-three-A of the general business law. Any ________________________________________________________________________ 5 collection upon, or satisfaction of, such loan, mortgage, note, or ________________________________________________________________________ 6 instrument of indebtedness shall be limited solely to the security taken ________________________________________________________________________ 7 in the interest in the real property located in the states of Tennessee, ________________________________________________________________________ 8 Kentucky or Missouri, or in the securities relating to the same as ________________________________________________________________________ 9 defined in article twenty-three-A of the general business law. ______________________________________________________________ 10  4. This act shall take effect on the one hundred twentieth day after 11 it shall have become a law, except that section 219 of the civil prac- 12 tice law and rules, as added by section two of this act shall expire and 13 be deemed repealed on January 1, 2007, and section 103-a of the banking 14 law, as added by section three of this act shall expire and be deemed 15 repealed on January 1, 2027.