Senate Bill S7768B

                                 BILL NUMBER:  S7768

 TITLE OF BILL :
An act to amend the general business law, in relation to the further
state notice filing requirement


 PURPOSE OF BILL :
The New York General Business Law (the "General Business Law")
requires any dealer to file a further state notice before it can sell
or offer for sale to the public within this state as principal or
agent any securities not otherwise exempted from the further state
notice filing requirement. Among the exemptions provided from the
requirement to file a further state notice is an exemption for
securities issued or guaranteed by a foreign government with which the
United States is at the time of the sale or offer for sale thereof
maintaining diplomatic relations, or by any province or political
subdivision of such a government (the "sovereign issuer exemption").
This bill will amend the General Business Law to exclude from the
sovereign issuer exemption any securities issued by (1) a foreign
state that (i) has had one or more final judgments in an aggregate
amount exceeding $100,000,000 entered against it by any state or
federal court located in New York, including any final judgment
originally issued in a foreign court that is filed or registered in
New York; (ii) fails to satisfy any such judgment for a period of more
than 2 years after it becomes effective; and (iii) is not a foreign
              

state eligible for (a) financing through the International Development
Association (unless such state is eligible for financing from the
International Bank for Reconstruction and Development), (b) debt
relief under the Enhanced HIPC Initiative (as defined in section
1625(e)(3) of the United States International Financial Institutions
Act), or (c) debt relief under the Multilateral Debt Relief Initiative
of the International Monetary Fund, or (2) any agency or
instrumentality of such a foreign state (any such foreign state,
agency or instrumentality, a "debt evading foreign state"). In
addition, this bill will amend the General Business Law to provide
that no debt evading foreign state shall directly or indirectly sell
or offer for sale to the public within this state any securities
unless it has (1) filed a further state notice and (2) paid a filing
fee in connection therewith in an amount equal to the greater of $15
million or 1.5% of the aggregate offering amount or, in the case of
debt securities, the aggregate principal amount, of (a) in the case of
an offering pursuant to an effective registration statement under the
United States Securities Act of 1933, all securities covered by such
registration statement, or (b) in the case of any other offering, all
securities offered by such debt evading foreign state or state-owned
corporation of a debt evading foreign state (whether in New York or in
any other state) as part of the same offering and in any related
offering. The bill will further amend the General Business Law to
provide that no debt evading foreign state shall complete or continue
any sale or offer for sale of securities in this state that is pending
on the date that this bill takes effect unless and until such debt
evading foreign state has filed a further state notice and paid the
filing fee in connection therewith as described herein.

 SUMMARY OF PROVISIONS :
Section 1 - Amends Subdivision 2 of Section 359-c of the General
Business Law to require the department of state to collect an
increased filing fee for filing and publishing each further state
notice filed by a debt evading foreign state or a state-owned
corporation of a debt evading foreign state.

Section 2 - Amends Section 359-c of the General Business Law by adding
a new subdivision 3. Subdivision 3 defines the terms "agency or
instrumentality of a foreign state", "final judgment", "foreign

state", "debt evading foreign state" and "state-owned corporation of a
debt evading foreign state".

Section 3 - Amends Subdivision 8 of Section 359-e by adding a new
Paragraph (b).  Paragraph (b) requires any debt evading foreign states
and state-owned corporation of a debt evading foreign state to file a
further state notice and pay the filing fee required under Subdivision
2 of Section 359-c prior to directly or indirectly (1) selling or
offering to sell any securities in this state or (2) completing or
continuing, as applicable, any sale or offer for sale of securities in
this state that is pending on the date on which this bill takes
effect.

Section 4 - Amends Paragraph (b) of Subdivision 1 of Section 359-f of
the General Business Law to exclude a debt evading foreign state from
the sovereign issuer exemption.

Section 5 - Provides that the act will take effective immediately.

 JUSTIFICATION :
New York taxpayers have invested billions of dollars in debt issued by
foreign sovereigns. To facilitate the issuance of their debt to New
York citizens and other individuals through New York's capital
markets, many foreign sovereigns designate New York as the place of
payment and the venue where the foreign sovereign waives sovereign
immunity and consents to jurisdiction to be sued in the case of a
default.  As a result, actions to enforce defaulted debt are
frequently brought in state and federal courts located in New York.
Although many foreign sovereigns pay their debts responsibly, some
foreign sovereigns that are capable of making payments to their
creditors instead choose to repudiate their debts and to refuse to pay
judgments rendered against them. Because of the difficulties
associated with enforcing judgments against foreign sovereigns, New
York taxpayers suffer significant losses, and have little legal
recourse, when foreign sovereigns choose not to pay their debts. The
losses incurred by taxpayers significantly affect New York tax
revenue, not only because New York cannot tax interest and other gains
that are not paid, but also because investors' losses can be offset
against other taxable gains.

The most egregious example of a foreign sovereign that is capable of
paying its debt, but that chooses not to, is the Republic of
Argentina. In 2001, Argentina defaulted on $81.2 billion of debt,
which is the largest sovereign debt default in history. Argentina
refused to negotiate with its bondholders until 2005. and then offered
the bondholders an exchange worth about 25-cents on the dollar on a
take-it-or-leave-it basis.

Approximately 76 percent of bondholders accepted the exchange offer,
and Argentina repudiated the remaining portion of its debt. Argentina
has repudiated these debts while claiming, in a recent filing with the
Securities and Exchange Commission, to have a debt-to-gross domestic
product ratio of 49.1% -less than the ratios of Canada, the United
Kingdom, France, Germany, and a variety of other European countries -
and, a budget surplus in each year from 2004 to 2008.

Dozens of lawsuits have been filed in the United States District Court
for the Southern District of New York as a result of the Argentina
debt default. The two largest creditors alone have claims and
judgments of over $3 billion. Judge Thomas P. Griesa, the most senior
judge in the Southern District, has repeatedly observed that Argentina
has never offered to pay the judgments rendered against it and instead
focused all of its efforts on protecting its assets from creditors. In
May 2009, Judge Griesa held that Argentina was in civil contempt of
court for failing to comply with court orders and drew an adverse

inference that Argentina had removed assets from New York in violation
of court orders.

The economic impact of this debt repudiation has been substantial. The
direct net costs to New York holders of defaulted Argentina debt
currently total $902 million, including $452 million in capital
losses, $382 million in foregone interest payments, and $180 million
in foregone investment returns, less nearly $112 million in tax
benefits created by the losses or foregone income. From December 2001
to December 2008, the indirect costs of the Argentina debt default,
through lost tax revenue, total approximately $329 million.

This bill seeks to offset a portion of the adverse effect that debt
evading foreign states have on New York tax revenue by imposing an
increased filing fee on the filing of a further state notice by a debt
evading foreign state or an agency or instrumentality of a debt
evading foreign state that is seeking to directly or indirectly offer
or sell securities in New York. The amount of the filing fee shall be
equal to the greater of $15 million or 1.5% of the aggregate offering
amount or, in the case of debt securities, the aggregate principal
amount, of (a) in the case of an offering pursuant to an effective
registration statement under the United States Securities Act of 1933,
all securities covered by such registration statement, or (b) in the
case of any other offering, all securities offered by such debt
evading foreign state or state-owned corporation of a debt evading
foreign state (whether in New York or in any other state) as part of
the same offering and in any related offering.

 LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :
At present, at least one debt evading foreign state, the Republic of
Argentina, is contemplating a securities offering that is likely to
include sales or offers for the sale of securities in New York.
Argentina has filed a registration statement with the Securities and
Exchange Commission relating to the offer and sale of securities
having an aggregate principal amount of up to $15 billion. If
Argentina sought to offer or sell any securities covered by such
registration statement in New York, this bill would require Argentina
to file a further state notice and pay a filing fee of up to $225
million for this offering. In addition, it is estimated that this bill
would raise revenue of an additional $30 million per year from
offerings by provinces and political subdivisions of Argentina.

 EFFECTIVE DATE :
This act shall take effect immediately.

                                 BILL NUMBER:  S7768A

 TITLE OF BILL :
An act to amend the general business law, in relation to the further
state notice filing requirement

 PURPOSE OF BILL :
The New York General Business Law (the "General Business Law")
requires any dealer to file a further state notice before it can sell
or offer for sale to the public within this state as principal or
agent any securities not otherwise exempted from the further state
notice filing requirement. Among the exemptions provided from the
requirement to file a further state notice is an exemption for
securities issued or guaranteed by a foreign government with which the
united States is at the time of the sale or offer for sale thereof
maintaining diplomatic relations, or by any province or political
subdivision of such a government (the "sovereign issuer exemption").
This bill will amend the General Business Law to exclude from the
sovereign issuer exemption any securities issued by (1) a foreign
state that (i) has had one or more final judgments in an aggregate
amount exceeding $100,000,000 entered against it by any state or
federal court located in New York, including any final judgment
originally issued in a foreign court that is filed or registered in
New York; (ii) fails to satisfy any such judgment for a period of more
than 2 years after it becomes effective; and (iii) is not a foreign
state eligible for (a) financing through the International Development
              

Association (unless such state is eligible for financing from the
International Bank for Reconstruction and Development), (b) debt
relief under the Enhanced RIPe Initiative (as defined in section
1625(e) (3) of the united States International Financial Institutions
Act), or (c) debt relief under the Multilateral Debt Relief Initiative
of the International Monetary Fund, or (2) any agency or
instrumentality of such a foreign state (any such foreign state,
agency or instrumentality, a "debt evading foreign state"). In
addition, this bill will amend the General Business Law to provide
that no debt evading foreign state shall directly or indirectly sell
or offer for sale to the public within this state any securities
unless it has (1) filed a further state notice and (2) paid a filing
fee in connection therewith in an amount equal to the greater of $15
million or 1.5% of the aggregate offering amount or, in the case of
debt securities, the aggregate principal amount, of (a) in the case of
an offering pursuant to an effective registration statement under the
united States Securities Act of 1933, all securities covered by such
registration statement, or (b) in the case of any other offering, all
securities offered by such debt evading foreign state or state owned
corporation of a debt evading foreign state (whether in New York or in
any other state) as part of the same offering and in any related
offering. The bill will further amend the General Business Law to
provide that no debt evading foreign state shall complete or continue
any sale or offer for sale of securities in this state that is pending
on the date that this bill takes effect unless and until such debt
evading foreign state has filed a further state notice and paid the
filing fee in connection therewith as described herein.

 SUMMARY OF PROVISIONS :
Section 1 - Amends Subdivision 2 of section 359-c of the General
Business Law to require the department of state to collect an
increased filing fee for filing and publishing each further state
notice filed by a debt evading foreign state or a state-owned
corporation of a debt evading foreign state.

Section 2 - Amends Section 359-c of the General Business Law by adding
a new subdivision 3. Subdivision 3 defines the terms "agency or
instrumentality of a foreign state", "final judgment", "foreign
state", "debt evading foreign state" and "state-owned corporation of a
debt evading foreign state".
Section 3 - Amends Subdivision 8 of section 359-e by adding a new
Paragraph (b). Paragraph (b) requires any debt evading foreign states
and state-owned corporation of a debt evading foreign state to file a
further state notice and pay the filing fee required under Subdivision
2 of section 359-c prior to directly or indirectly (1) selling or
offering to sell any securities in this state or (2) completing or
continuing, as applicable, any sale or offer for sale of securities in
this state that is pending on the date on which this bill takes
effect.

Section 4 - Amends Paragraph (b) of Subdivision 1 of Section 359-f of
the General Business Law to exclude a debt evading foreign state from
the sovereign issuer exemption.

Section 5 - Provides that the act will take effective immediately.

 JUSTIFICATION :
New York taxpayers have invested billions of dollars in debt issued by
foreign sovereigns. To facilitate the issuance of their debt to New
York citizens and other individuals through New York's capital
markets, many foreign sovereigns designate New York as the place of
payment and the venue where the foreign sovereign waives sovereign
immunity and consents to jurisdiction to be sued in the case of a
default. As a result, actions to enforce defaulted debt are frequently
brought in state and federal courts located in New York.  Although
many foreign sovereigns pay their debts responsibly, some foreign
sovereigns that are capable of making payments to their creditors
instead choose to repudiate their debts and to refuse to pay judgments
rendered against them. Because of the difficulties associated with
enforcing judgments against foreign sovereigns, New York taxpayers
suffer significant losses, and have little legal recourse, when
foreign sovereigns choose not to pay their debts. The losses incurred
by taxpayers significantly affect New York tax revenue, not only
because New York cannot tax interest and other gains that are not
paid, but also because investors' losses can be offset against other
taxable gains.

The most egregious example of a foreign sovereign that is capable of
paying its debt, but that chooses not to, is the Republic of
Argentina.  In 2001, Argentina defaulted on $81.2 billion of debt,
which is the largest sovereign debt default in history. Argentina
refused to negotiate with its bondholders until 2005, and then offered
the bondholders an exchange worth about 25-cents on the dollar on a
take-it-or-leave-it basis.

Approximately 76 percent of bondholders accepted the exchange offer,
and Argentina repudiated the remaining portion of its debt. Argentina
has repudiated these debts while claiming, in a recent filing with the
Securities and Exchange Commission, to have a debt-to-gross domestic
product ratio of 49.1% -less than the ratios of Canada, the United
Kingdom, France, Germany, and a variety of other European countries -
and, a budget surplus in each year from 2004 to 2008.

Dozens of lawsuits have been filed in the United States District Court
for the Southern District of New York as a result of the Argentina
debt default. The two largest creditors alone have claims and
judgments of over $3 billion. Judge Thomas P. Griesa, the most senior
judge in the Southern District, has repeatedly observed that Argentina
has never offered to pay the judgments rendered against it and instead
focused all of its efforts on protecting its assets from creditors. In
May 2009, Judge Griesa held that Argentina was in civil contempt of
court for failing to comply with court orders and drew an adverse
inference that Argentina had removed assets from New York in violation
of court orders.


The economic impact of this debt repudiation has been substantial. The
direct net costs to New York holders of defaulted Argentina debt
currently total $902 million, including $452 million in capital
losses, $382 million in foregone interest payments, and $180 million
in foregone investment returns, less nearly $112 million in tax
benefits created by the losses or foregone income. From December 2001
to December 2008, the indirect costs of the Argentina debt default,
through lost tax revenue, total approximately $329 million.

This bill seeks to offset a portion of the adverse effect that debt
evading foreign states have on New York tax revenue by imposing an
increased filing fee on the filing of a further state notice by a debt
evading foreign state or an agency or instrumentality of a debt
evading foreign state that is seeking to directly or indirectly offer
or sell securities in New York. The amount of the filing fee shall be
equal to the greater of $15 million or 1.5% of the aggregate offering
amount or, in the case of debt securities, the aggregate principal
amount, of (a) in the case of an offering pursuant to an effective
registration statement under the United States Securities Act of 1933,
all securities covered by such registration statement, or (b) in the
case of any other offering, all securities offered by such debt
evading foreign state or state-owned corporation of a debt evading
foreign state (whether in New York or in any other state) as part of
the same offering and in any related offering.

 LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :
At present, at least one debt evading foreign state, the Republic of
Argentina, is contemplating a securities offering that is likely to
include sales or offers for the sale of securities in New York.
Argentina has filed a registration statement with the Securities and
Exchange Commission relating to the offer and sale of securities
having an aggregate principal amount of up to $15 billion. If
Argentina sought to offer or sell any securities covered by such
registration statement in New York, this bill would require Argentina
to file a further state notice and pay a filing fee of up to $225
million for this offering. In addition, it is estimated that this bill
would raise revenue of an additional $30 million per year from
offerings by provinces and political subdivisions of Argentina.

 EFFECTIVE DATE :
This act shall take effect immediately.