Senate Bill S4453A

                                BILL NUMBER:S4453

TITLE  OF  BILL:    An  act  to  amend  the  labor law, in relation to
prohibiting employer retaliation against employees  in  the  financial
services industry

PURPOSE OR GENERAL IDEA OF BILL:

To  prohibit  employer  retaliation against employees in the financial
services industry who report violations of laws, rules or  regulations
to a supervisor or to a public body.

SUMMARY OF SPECIFIC PROVISIONS:

Section  1  amends  section  740(1)  of  the labor law by adding a new
paragraph (h) to define "Financial institution' to mean:

(1) an insured bank;

(2) a commercial bank or trust company;

(3) a private banker;

(A) an agency or branch of a foreign bank in the United States;

(5) any credit union; a thrift institution;
              

(6) a broker or dealer registered with  the  Securities  and  Exchange
Commission;

(7) a broker or dealer in securities or commodities;

(8) an investment banker or investment company;

(9) a currency exchange;

(10)  an  issuer,  redeemer,  or cashier of traveler's checks, checks,
money orders, or similar instrument's;

(11) an operator of a credit card system;

(12) an insurance company;

(13) a dealer in precious metals, stones, or jewels;

(14) a pawnbroker;

(15) a loan or finance company;

(16) a travel agency;

(17) a licensed sender of money or any other person who engages  as  a
business in the transmission of funds;

(19) a telegraph company;

(19) a business engaged in vehicle sales;


(20) persons involved in real estate closings and settlements;

(21) the Unites States Postal Service;

(22)  an agency of the United States government or of a state or local
government carrying out a duty or Power of  a  business  described  in
this paragraph;

(23) an Indian casino, or other gaming operation;

(24)any  business  or  agency  which engages in any activity which the
superintendent of the department of financial services  determines  to
be  an  activity  which is similar to, related to, or a substitute for
any activity in which any business  described  in  this  paragraph  is
authorized to engage;

(25) or any other business designated by the superintendent whose cash
transactions  have  a  high  degree of usefulness in criminal, tax, or
regu- latory matters.

Section 2 amends section 740(2)(a) of the labor  law,  as  amended  by
chapter  442  of the laws of 2006, to prohibit an employer from taking
any retaliatory personnel action against an employee who discloses, or
threatens to disclose to a supervisor or to a public body an activity,
policy or practice of the employer that is in violation of  law,  rule
or  regulation  which  constitutes a violation of the federal or state
securities laws, financial or accounting fraud, or misappropriation or
misuse of funds of a financial institution, a hedge  fund  or  private
equity  firm, or of the clients or customers of such organizations; or
which constitutes bribery of a public official.

Section 3 is the effective date.

JUSTIFICATION:

In the wake of the financial crisis  caused  by  fraudulent  financial
schemes,  it is in the interest of the state to encourage employees of
financial institutions to report illegal and unethical behavior  to  a
supervisor or to a public body.

Current  law only protects employees who report illegal behavior which
creates and presents a substantial and specific danger to  the  public
health or safety.

This  law  will  protect  employees  who  report or threaten to report
illegal behavior in financial institutions and actions that constitute
bribery of a public official.

The need for this legislation is highlighted by the May 2012 New  York
Court  of Appeals decision in Sullivan v Harnisch. The majority of the
Court rejected a wrongful  discharge  case  brought  by  a  compliance
officer  claiming  that he was terminated for questioning the personal
stock trades of the company's president and ruled that current law did
not prohibit such discharge. In his dissenting  opinion,  the  Court's
Chief  Judge  said  that  the  majority's  decision  created, "A great
Potential for abuse in the financial services industry,"  which  would
need to be solved by legislation.


This  law addresses that need by protecting employees in the financial
services  industry  who  report  illegal  behavior  from  retaliation,
including retaliatory termination.

Without the efforts of employees willing to report and prevent illegal
and  unethical  behavior,  such behavior can continue until discovered
and acted upon by a third party outside the company.

According  to  a  United  States  Senate  report,  whistleblower  tips
identified  54.1%.  of  uncovered  fraud  schemes in public companies,
while  external  auditors,  including  the   Security   and   Exchange
Commission, detected only 4.1% of uncovered fraud schemes.

As  further  stated  in  the  Chief Judge's dissenting opinion, "These
protections must exist not only to decrease the  likelihood  that  the
employees  will  succumb  to  pressures  to  ignore  or  violate their
obligations for fear of termination, but also to protect the public."

LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

The act shall take effect immediately.