Assembly Bill A6246

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6246

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                             March 25, 2013
                               ___________

Introduced  by M. of A. BRENNAN, MORELLE, ORTIZ, HIKIND, GALEF -- Multi-
  Sponsored by -- M. of  A.  AUBRY,  CAHILL,  CLARK,  COOK,  CYMBROWITZ,
  FARRELL,  GLICK,  JACOBS,  PERRY,  RIVERA,  SWEENEY  --  read once and
  referred to the Committee on Corporations, Authorities and Commissions

AN ACT to amend the business  corporation  law,  the  limited  liability
  company  law,  the  partnership  law,  the public authorities law, the
  general business law, and the retirement and social security  law,  in
  relation to auditors' professional responsibility

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  This act shall be known and may be cited as the "integrity
in auditing act".
  S 2.  The business corporation law is amended by adding a new  section
521 to read as follows:
S  521.  APPLICABILITY  OF GENERAL BUSINESS LAW TO BUSINESS CORPORATIONS
         ISSUING AUDITED FINANCIAL STATEMENTS.
  EVERY BUSINESS CORPORATION ORGANIZED  UNDER  THIS  CHAPTER  AND  EVERY
FOREIGN CORPORATION (INCLUDING EVERY FOREIGN PROFESSIONAL SERVICE CORPO-
RATION)  QUALIFIED TO DO BUSINESS IN THIS STATE PURSUANT TO THIS CHAPTER
THAT ISSUES AUDITED FINANCIAL STATEMENTS SHALL BE SUBJECT  TO  PARAGRAPH
(A)  OF  SUBDIVISION  THREE  OF SECTION THREE HUNDRED FIFTY-TWO-C OF THE
GENERAL BUSINESS LAW.
  S 3. The limited liability company law is  amended  by  adding  a  new
section 510 to read as follows:
  S  510.  APPLICABILITY  OF  GENERAL  BUSINESS LAW TO LIMITED LIABILITY
COMPANIES ISSUING AUDITED FINANCIAL STATEMENTS. EVERY LIMITED  LIABILITY
COMPANY ORGANIZED UNDER THIS CHAPTER AND EVERY FOREIGN LIMITED LIABILITY
COMPANY  (INCLUDING EVERY FOREIGN PROFESSIONAL SERVICE LIMITED LIABILITY
COMPANY) QUALIFIED TO DO BUSINESS IN THIS STATE PURSUANT TO THIS CHAPTER
THAT ISSUES AUDITED FINANCIAL STATEMENTS SHALL BE SUBJECT  TO  PARAGRAPH

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09784-01-3

              

A. 6246                             2

(A)  OF  SUBDIVISION  THREE  OF SECTION THREE HUNDRED FIFTY-TWO-C OF THE
GENERAL BUSINESS LAW.
  S  4.  The  partnership law is amended by adding a new section 44-a to
read as follows:
  S 44-A. APPLICABILITY OF GENERAL BUSINESS LAW TO PARTNERSHIPS  ISSUING
AUDITED  FINANCIAL  STATEMENTS. EVERY PARTNERSHIP OR LIMITED PARTNERSHIP
ORGANIZED UNDER THIS CHAPTER AND EVERY FOREIGN  PARTNERSHIP  OR  LIMITED
PARTNERSHIP  DOING BUSINESS IN OR QUALIFIED TO DO BUSINESS IN THIS STATE
PURSUANT TO THIS CHAPTER THAT ISSUES AUDITED FINANCIAL STATEMENTS  SHALL
BE  SUBJECT  TO  PARAGRAPH  (A)  OF  SUBDIVISION  THREE OF SECTION THREE
HUNDRED FIFTY-TWO-C OF THE GENERAL BUSINESS LAW.
  S 5. The public authorities law is amended by  adding  a  new  section
2802-a to read as follows:
  S  2802-A.  APPLICABILITY  OF  GENERAL  BUSINESS LAW TO PUBLIC SERVICE
CORPORATIONS THAT  ISSUE  AUDITED  FINANCIAL  STATEMENTS.  EVERY  PUBLIC
SERVICE  CORPORATION  ORGANIZED  UNDER  THIS CHAPTER THAT ISSUES AUDITED
FINANCIAL STATEMENTS SHALL BE SUBJECT TO PARAGRAPH  (A)  OF  SUBDIVISION
THREE OF SECTION THREE HUNDRED FIFTY-TWO-C OF THE GENERAL BUSINESS LAW.
  S  6.  Subdivision  1  of  section 352 of the general business law, as
amended by chapter 961 of the laws  of  1960,  is  amended  to  read  as
follows:
  1.  Whenever  it  shall  appear  to  the  [attorney-general]  ATTORNEY
GENERAL, either upon complaint or otherwise, that in the  advertisement,
investment  advice, purchase, or sale within this state of any commodity
dealt in on any exchange within the United  States  of  America  or  the
delivery of which is contemplated by transfer of negotiable documents of
title  all  of  which are hereinafter called commodities, or that in the
issuance, exchange, purchase, sale, promotion,  negotiation,  advertise-
ment,  investment  advice, or distribution within or from this state, of
any stocks, bonds, notes, evidences  of  interest  or  indebtedness,  or
other  securities,  including  oil  and  mineral deeds or leases and any
interest therein, sold or  transferred  in  whole  or  in  part  to  the
purchaser  where  the  same do not effect a transfer of the title in fee
simple to the land, or negotiable documents of title, or foreign curren-
cy orders, calls, or options therefor, hereinafter  called  security  or
securities,  any  person,  partnership,  corporation,  company,  LIMITED
LIABILITY COMPANY, trust, or association, or any agent or employee ther-
eof, shall have employed, or employs, or is about to employ any  device,
scheme  or  artifice  to  defraud  or for obtaining money or property by
means of any false pretense, representation, or  promise,  or  that  any
person,  partnership,  corporation,  company, LIMITED LIABILITY COMPANY,
trust, or association, or any agent  or  employee  thereof,  shall  have
made, makes, or attempts to make within or from this state fictitious or
pretended  purchases  or sales of securities or commodities, or that any
person, partnership, corporation, company,  LIMITED  LIABILITY  COMPANY,
trust,  or  association,  or  agent  or  employee  thereof,  shall  have
employed, or employs, or is about to employ, any deception, misrepresen-
tation, concealment, suppression, fraud, false pretense, or false  prom-
ise,  or  shall have engaged in, or engages in, or is about to engage in
any practice or transaction  or  course  of  business  relating  to  the
purchase,  exchange, investment advice, or sale of securities or commod-
ities which is fraudulent or in violation of law and which has  operated
or  which  would  operate  as  a  fraud  upon the purchaser, OR THAT ANY
PERSON, PARTNERSHIP, CORPORATION, COMPANY, TRUST, OR ASSOCIATION,  BEING
EITHER  THE  ISSUER  OF  ANY SECURITY, OR ANY AGENT OR EMPLOYEE THEREOF,
SHALL HAVE ISSUED OR CAUSED TO BE ISSUED ANY AUDITED FINANCIAL STATEMENT

A. 6246                             3

IN CONNECTION WITH WHICH THE AUDITOR ENGAGED IN PROFESSIONAL MISCONDUCT,
OR THAT ANY AUDITOR WHO KNEW OR  SHOULD  HAVE  KNOWN  THAT  HIS  OR  HER
CERTIFICATION OR OPINION WOULD BE USED IN CONNECTION WITH SUCH FINANCIAL
STATEMENT,  OR  ANY AGENT OR EMPLOYEE THEREOF, PERMITTED THE ISSUANCE OF
SUCH FINANCIAL STATEMENT INTENDING THAT ANY PERSON RELY ON SUCH  AUDITED
FINANCIAL STATEMENT, or that any broker, dealer, or [salesman] SALESPER-
SON,  as  defined by section three hundred fifty-nine-e of this article,
or any agent or employee thereof, has sold or offered  for  sale  or  is
attempting to sell or is offering for sale any security or securities in
violation  of  the  provisions  of said section or section three hundred
fifty-nine-ee, or that any  other  section  of  this  article  has  been
violated,  any  one  or all of which devices, schemes, artifices, ficti-
tious or pretended purchases or  sales  of  securities  or  commodities,
deceptions,   misrepresentations,  concealments,  suppressions,  frauds,
false pretenses, false promises, practices, transactions, and courses of
business are hereby declared to be and are hereinafter referred to as  a
fraudulent  practice or fraudulent practices or he OR SHE believes it to
be in the public interest that an investigation be made, he OR SHE  may,
in his OR HER discretion, either require or permit such person, partner-
ship, corporation, company, LIMITED LIABILITY COMPANY, trust, or associ-
ation,  or  any  agent  or  employee  thereof, to file with him OR HER a
statement in writing, under oath or otherwise, as to all the  facts  and
circumstances  concerning the subject matter which he OR SHE believes it
is to the public interest to investigate, and,  for  that  purpose,  may
prescribe  forms  upon which such statements shall be made.  The [attor-
ney-general] ATTORNEY GENERAL may  also  require  such  other  data  and
information as he OR SHE may deem relevant and may make such special and
independent investigations as he OR SHE may deem necessary in connection
with the matter.
  S  7.  Section  352 of the general business law is amended by adding a
new subdivision 1-a to read as follows:
  1-A. AS USED IN THIS SECTION:
  (A) THE TERM "FINANCIAL STATEMENT" MEANS ANY BALANCE SHEET, INCOME  OR
LOSS  STATEMENT, ANY ATTACHMENTS OR EXHIBITS THERETO, OR ANY OTHER PRES-
ENTATION OF FINANCIAL  INFORMATION  CONCERNING  A  BUSINESS  ENTERPRISE,
HOWEVER  DENOMINATED, THAT IS INTENDED TO PORTRAY THE FINANCIAL POSITION
OF SUCH BUSINESS ENTERPRISE OR ANY SIGNIFICANT PORTION THEREOF.
  (B) THE TERM "AUDITED", WHEN  USED  IN  CONNECTION  WITH  A  FINANCIAL
STATEMENT MEANS ACCOMPANIED BY AN OPINION, REPORT, OR CERTIFICATE ISSUED
BY  A  LICENSED  PUBLIC ACCOUNTANT OR CERTIFIED PUBLIC ACCOUNTANT ACTING
WITHIN THE PRACTICE OF PUBLIC ACCOUNTANCY AS DEFINED IN  SECTION  SEVEN-
TY-FOUR HUNDRED ONE OF THE EDUCATION LAW.
  (C)  THE TERM "AUDITOR" MEANS THE LICENSED PUBLIC ACCOUNTANT OR CERTI-
FIED PUBLIC ACCOUNTANT, AND HIS OR HER FIRM, WHICH ISSUED  THE  OPINION,
REPORT,  OR  CERTIFICATE APPLICABLE TO THE FINANCIAL STATEMENTS THAT ARE
AUDITED.
  (D) THE TERM "FIRM" MEANS A PARTNERSHIP, CORPORATION, COMPANY, LIMITED
LIABILITY COMPANY, FIRM, OR OTHER ORGANIZATION ENGAGED IN  WHOLE  OR  IN
PART IN THE PRACTICE OF PUBLIC ACCOUNTANCY.
  (E)  THE TERM "PROFESSIONAL MISCONDUCT" HAS THE MEANING ASSIGNED TO IT
BY THE EDUCATION LAW, OR ANY REGULATIONS ADOPTED BY THE BOARD OF REGENTS
OR THE COMMISSIONER OF EDUCATION WITH  THE  APPROVAL  OF  THE  BOARD  OF
REGENTS  PURSUANT  TO  SECTION  SIXTY-FIVE HUNDRED NINE OF THE EDUCATION
LAW; PROVIDED, HOWEVER, THAT, IN THE ABSENCE OF  ANY  SUCH  REGULATIONS,
THE TERM "PROFESSIONAL MISCONDUCT" MEANS, AS A MINIMUM, A SITUATION:

A. 6246                             4

  (1)  WHERE  AN  AUDITOR OR HIS OR HER FIRM HAS A CONFLICT OF INTEREST,
MEANING ANY INTEREST, FINANCIAL OR OTHERWISE, DIRECT OR INDIRECT,  WHICH
IS  IN  SUBSTANTIAL CONFLICT WITH THE PROPER PERFORMANCE OF AN AUDIT AND
ISSUANCE OF A PROPER REPORT, OPINION, OR CERTIFICATE; OR
  (2)  WHERE  AN AUDITOR OR HIS OR HER FIRM HAS PROVIDED TO ANY PUBLICLY
TRADED COMPANY ANY NON-AUDIT SERVICES AFTER THE EFFECTIVE DATE  OF  THIS
SUBDIVISION; PROVIDED, HOWEVER, THAT IT IS AN AFFIRMATIVE DEFENSE TO ANY
CHARGE OF PROFESSIONAL MISCONDUCT UNDER THIS SUBDIVISION THAT THE AMOUNT
OR  VALUE  OF  NON-AUDIT  SERVICES RENDERED BY THE AUDITOR OR HIS OR HER
FIRM IS SO SMALL IN RELATION TO THE AUDIT RELATIONSHIP WITH THE PUBLICLY
TRADED COMPANY THAT NO REASONABLE PERSON COULD BELIEVE THAT  A  CONFLICT
OF INTEREST WOULD EXIST.
  (F)  THE  TERM  "PUBLICLY TRADED COMPANY" MEANS ANY BUSINESS ORGANIZA-
TION, REGARDLESS OF THE FORM OF ORGANIZATION, THAT ISSUES OR HAS  ISSUED
SECURITIES AS DEFINED IN THIS SECTION.
  (G)  THE  TERM  "NON-AUDIT  SERVICES" INCLUDES, BUT IS NOT LIMITED TO,
BUSINESS  CONSULTING,  BOOKKEEPING  SERVICES,  APPRAISAL  OR   VALUATION
SERVICES,  FAIRNESS  OPINIONS, CONTRIBUTION-IN-KIND REPORTING, ACTUARIAL
SERVICES, INTERNAL AUDIT OUTSOURCING, MANAGEMENT FUNCTIONS, BROKER-DEAL-
ER SERVICES, INVESTMENT ADVISEMENT, INVESTMENT BANKING, EXPERT SERVICES,
RISK CONSULTING, TAX SERVICES, CORPORATE FINANCING SERVICES, HUMAN CAPI-
TAL CONSULTING, LEGAL SERVICES, BUSINESS  INTERNET  SERVICES,  ASSURANCE
SERVICES, AND OUTSOURCING SERVICES.
  S  8.  The  opening paragraph of subdivision 3 of section 352-c of the
general business law is designated paragraph (b) and a new paragraph (a)
is added to read as follows:
  (A) IT IS ILLEGAL AND PROHIBITED FOR ANY PERSON,  PARTNERSHIP,  CORPO-
RATION, COMPANY, LIMITED LIABILITY COMPANY, TRUST, OR ASSOCIATION, BEING
EITHER  THE  ISSUER  OF  ANY SECURITY, OR ANY AGENT OR EMPLOYEE THEREOF,
KNOWINGLY TO ISSUE OR CAUSE TO BE ISSUED ANY AUDITED FINANCIAL STATEMENT
IN CONNECTION WITH WHICH THE AUDITOR ENGAGED IN PROFESSIONAL MISCONDUCT,
OR FOR ANY AUDITOR WHO KNEW OR SHOULD HAVE KNOWN THAT HIS OR HER CERTIF-
ICATION OR OPINION WOULD BE  USED  IN  CONNECTION  WITH  SUCH  FINANCIAL
STATEMENT,  OR  ANY AGENT OR EMPLOYEE THEREOF, TO PERMIT THE ISSUANCE OF
ANY SUCH AUDITED FINANCIAL STATEMENT INTENDING THAT ANY PERSON  RELY  ON
SUCH AUDITED FINANCIAL STATEMENT; PROVIDED, HOWEVER, THAT THIS PARAGRAPH
SHALL NOT APPLY TO ANY PERSON, PARTNERSHIP, CORPORATION, COMPANY, LIMIT-
ED  LIABILITY  COMPANY,  TRUST,  OR ASSOCIATION THAT IS A SMALL BUSINESS
CONCERN AS DEFINED IN SECTION ONE HUNDRED SIXTY  OF  THE  STATE  FINANCE
LAW, EXCEPT IN A CASE WHERE SUCH SMALL BUSINESS CONCERN ISSUES AN AUDIT-
ED  FINANCIAL STATEMENT FOR THE PURPOSE OF OBTAINING CREDIT OR ANY STATE
BENEFIT. IN ADDITION TO THE PENALTIES  PROVIDED  IN  SUBDIVISIONS  FOUR,
FIVE, AND SIX OF THIS SECTION, ANY VIOLATOR OF THIS PARAGRAPH IS SUBJECT
TO THE CIVIL PENALTIES PROVIDED IN SECTION THREE HUNDRED FIFTY-TWO-CC OF
THIS ARTICLE.
  S  9. The general business law is amended by adding a new section 352-
cc to read as follows:
  S 352-CC. CIVIL PENALTIES RESULTING FROM VIOLATIONS OF  PARAGRAPH  (A)
OF  SUBDIVISION THREE OF SECTION THREE HUNDRED FIFTY-TWO-C OF THIS ARTI-
CLE. ANY ISSUER OF ANY SECURITY OR ANY AUDITOR (IN ADDITION TO ANY OTHER
SANCTION FOR PROFESSIONAL  MISCONDUCT  UNDER  THE  EDUCATION  LAW)  THAT
VIOLATES THE PROVISIONS OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION
THREE HUNDRED FIFTY-TWO-C OF THIS ARTICLE IS SUBJECT TO THE FOLLOWING:
  1. EACH SUCH VIOLATOR IS JOINTLY AND SEVERALLY LIABLE TO STOCKHOLDERS,
MEMBERS,  PARTNERS,  LENDERS, PURCHASERS, OR OTHER INVESTORS IN AN INDI-
VIDUAL OR CLASS ACTION FOR DAMAGES RESULTING FROM SUCH VIOLATION. IF ANY

A. 6246                             5

PLAINTIFF IS UNABLE TO PROVE ANY  ACTUAL  DAMAGES  RESULTING  FROM  SUCH
VIOLATION,  SUCH  PLAINTIFF  IS  ENTITLED  TO NOMINAL DAMAGES SET BY THE
COURT, BUT NOT LESS THAN FIFTY  DOLLARS.  ANY  SUCCESSFUL  PLAINTIFF  IS
ENTITLED TO RECOVER REASONABLE ATTORNEY'S FEES.
  2.  EACH PERSON CONVICTED OF A MISDEMEANOR OR A FELONY UNDER PARAGRAPH
(A) OF SUBDIVISION THREE OF SECTION THREE HUNDRED  FIFTY-TWO-C  OF  THIS
ARTICLE,  OR WHO HAS ENTERED INTO ANY CONSENT ORDER, JUDGMENT, OR DECREE
AS A RESULT OF ALLEGATIONS OF A VIOLATION OF PARAGRAPH (A)  OF  SUBDIVI-
SION THREE OF SECTION THREE HUNDRED FIFTY-TWO-C OF THIS ARTICLE, WHETHER
OR  NOT  SUCH  CONSENT  ORDER,  JUDGMENT,  OR  DECREE  ADMITS  ANY  SUCH
VIOLATION, SHALL BE BARRED FOR A PERIOD OF FIVE  YEARS,  OR  SUCH  OTHER
PERIOD  ESTABLISHED  IN  SUCH  CONSENT  ORDER, JUDGMENT, OR DECREE, FROM
RECEIVING ANY ECONOMIC DEVELOPMENT GRANTS, ANY  WAIVERS  OR  REBATES  OF
TAXES,  OR OTHER SIMILAR BENEFITS FROM THE STATE OR ANY POLITICAL SUBDI-
VISION OR PUBLIC BENEFIT CORPORATION OF THE STATE, OR  ANY  CONTRACT  TO
SELL  GOODS, SERVICES, OR BOTH, OF ANY KIND OR DESCRIPTION, TO THE STATE
OR ANY POLITICAL SUBDIVISION OR PUBLIC BENEFIT CORPORATION OF THE STATE.
  3. THE ATTORNEY GENERAL SHALL GIVE NOTICE OF  ANY  CONVICTION  OR  ANY
CONSENT  ORDER,  JUDGMENT,  OR  DECREE  WITH RESPECT TO ANY VIOLATION OF
PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION THREE HUNDRED  FIFTY-TWO-C
OF  THIS ARTICLE TO THE GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE,
THE SPEAKER OF THE ASSEMBLY, THE CHIEF EXECUTIVE OFFICERS OF  ALL  POLI-
TICAL SUBDIVISIONS AND PUBLIC BENEFIT CORPORATIONS OF THE STATE, AND THE
TRUSTEES  OF  ALL  PUBLIC  PENSION  FUNDS SUBJECT TO SECTION ONE HUNDRED
SEVENTY-SEVEN-E OF THE RETIREMENT AND SOCIAL SECURITY LAW. THE  VIOLATOR
SHALL,  IN  ADDITION  TO  ALL OTHER FINES, PENALTIES, AND COSTS, PAY THE
REASONABLE COSTS OF PREPARING AND GIVING SUCH NOTICES.
  S 10. Paragraph (c) of subdivision 1 of section 359-e of  the  general
business law, as added by chapter 692 of the laws of 1959, is amended to
read as follows:
  (c)  A  ["salesman"  shall  mean]  "SALESPERSON"  MEANS  and [include]
INCLUDES  every person employed by a broker or dealer as said terms  are
defined  in this section, for the purpose of representing such broker or
dealer in the sale or purchase of securities to or from the public with-
in or from this state.
  S 11. The retirement and social security law is amended  by  adding  a
new section 177-e to read as follows:
  S  177-E.  INVESTMENT  BARRED IN CERTAIN SECURITIES. 1. THE TRUSTEE OR
TRUSTEES OF A FUND ARE AUTHORIZED NOT TO  MAKE  ANY  INVESTMENT  IN  ANY
SECURITY  OR  SECURITIES ISSUED BY ANY PERSON CONVICTED OF A MISDEMEANOR
OR A FELONY UNDER PARAGRAPH (A) OF SUBDIVISION THREE  OF  SECTION  THREE
HUNDRED FIFTY-TWO-C OF THE GENERAL BUSINESS LAW, OR WHO HAS ENTERED INTO
ANY  CONSENT  ORDER, JUDGMENT, OR DECREE AS A RESULT OF ALLEGATIONS OF A
VIOLATION OF SUCH SECTION, WHETHER OR NOT SUCH CONSENT ORDER,  JUDGMENT,
OR  DECREE ADMITS ANY SUCH VIOLATION, FOR A PERIOD OF FIVE YEARS OR SUCH
OTHER PERIOD AS MAY BE ESTABLISHED IN SUCH CONSENT ORDER,  JUDGMENT,  OR
DECREE  FROM THE DATE WHEN SUCH TRUSTEE OR TRUSTEES SHALL RECEIVE NOTICE
OF SUCH CONVICTION OR CONSENT ORDER, JUDGMENT, OR DECREE FROM THE ATTOR-
NEY GENERAL OR FROM THE TIME WHEN SUCH TRUSTEE OR  TRUSTEES  SHALL  HAVE
ACTUAL  KNOWLEDGE  OF  SUCH  CONVICTION  OR  CONSENT ORDER, JUDGMENT, OR
DECREE, WHICHEVER IS EARLIER.
  2. IN THE EVENT THAT AT THE TIME OF  RECEIVING  THE  NOTICE  FROM  THE
ATTORNEY  GENERAL  DESCRIBED  IN  SUBDIVISION  ONE OF THIS SECTION OR OF
RECEIVING ACTUAL KNOWLEDGE OF THE CONVICTION OR CONSENT ORDER, JUDGMENT,
OR DECREE DESCRIBED IN SUCH SUBDIVISION ONE, THE TRUSTEE OR TRUSTEES  OF
A FUND HOLD ON BEHALF OF THE FUND ANY SECURITY OR SECURITIES ISSUED BY A

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VIOLATOR  OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION THREE HUNDRED
FIFTY-TWO-C OF THE GENERAL BUSINESS LAW, SUCH TRUSTEE  OR  TRUSTEES  ARE
AUTHORIZED TO DIVEST THEMSELVES OF SUCH SECURITIES, UNLESS, IN THE JUDG-
MENT OF SUCH TRUSTEE OR TRUSTEES OF SUCH FUND, SUCH DIVESTMENT WOULD NOT
BE IN THE BEST INTEREST OF THE BENEFICIARIES OF SUCH FUND.
  S  12.  If  any  item,  clause,  sentence,  subparagraph, subdivision,
section, or other part of this act, or the application  thereof  to  any
person  or  circumstances, is held to be invalid, such holding shall not
affect, impair, or invalidate the remainder of this act, or the applica-
tion of such section or part of a section held  invalid,  to  any  other
person  or  circumstances, but shall be confined in its operation to the
item, clause, sentence, subparagraph,  subdivision,  section,  or  other
part of this act directly involved in such holding, or to the person and
circumstances therein involved.
  S 13. This act shall take effect on the first of April next succeeding
the date on which it shall have become a law.