S T A T E O F N E W Y O R K
________________________________________________________________________
8769--A
2025-2026 Regular Sessions
I N A S S E M B L Y
June 2, 2025
___________
Introduced by M. of A. TAPIA -- read once and referred to the Committee
on Economic Development -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the economic development law, in relation to enacting
"the New York state credit risk transparency and investor protection
act"
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 "New York
state credit risk transparency and investor protection act".
§ 2. The economic development law is amended by adding a new section
103-a to read as follows:
§ 103-A. STATE BOND SECURITY. 1. FOR THE PURPOSES OF THIS SECTION,
THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
(A) "CREDIT RISK DECAY" SHALL MEAN THE NATURAL REDUCTION IN THE LIKE-
LIHOOD OF BOND DEFAULT OVER TIME, RESULTING FROM THE BOND'S AMORTI-
ZATION, IMPROVED ISSUER PERFORMANCE, OR EXTERNAL ECONOMIC FACTORS THAT
REDUCE DEFAULT RISK;
(B) "MATERIAL CREDIT EVENT" SHALL MEAN ANY EVENT THAT SIGNIFICANTLY
IMPACTS THE ISSUER'S ABILITY TO MEET ITS OBLIGATIONS, INCLUDING BUT NOT
LIMITED TO:
(I) CHANGES IN FEDERAL FUNDING, INCLUDING BUT NOT LIMITED TO MEDICAID
CUTS OR INFRASTRUCTURE FUNDING REDUCTIONS;
(II) TARIFFS, TRADE POLICY CHANGES, OR OTHER EXTERNAL ECONOMIC FACTORS
THAT MAY ALTER THE BOND ISSUER'S FINANCIAL POSITION; OR
(III) ANY SIGNIFICANT MODIFICATION OF LEGAL OBLIGATIONS THAT AFFECTS A
BOND'S PERFORMANCE;
(C) "RISK RECONCILIATION STATEMENT" SHALL MEAN A QUARTERLY REPORT
FILED BY AN ISSUER OF BONDS, WHICH PROVIDES AN UPDATE ON THE BOND'S
CREDIT RISK, INCLUDING BUT NOT LIMITED TO:
(I) CHANGES IN CREDIT RATINGS;
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13079-03-5
A. 8769--A 2
(II) MATERIAL CREDIT EVENTS AFFECTING BOND PERFORMANCE; AND
(III) YIELD-TO-MATURITY DRIFT AND OTHER RELEVANT CREDIT PERFORMANCE
METRICS;
(D) "YIELD-TO-MATURITY DRIFT" OR "YTM DRIFT" SHALL MEAN THE CHANGE IN
THE YIELD OF A BOND OVER TIME DUE TO SHIFTS IN THE CREDIT QUALITY OF THE
ISSUER, AND THE COLLATERAL OR EXTERNAL CREDIT FACTORS, THAT IMPACT SUCH
BOND'S RISK PROFILE AND VALUATION;
(E) "FIXED POINT SCALE" SHALL MEAN A STANDARDIZED METHOD USED TO
ASSESS THE BOND'S CURRENT PERFORMANCE BY COMPARING ITS ORIGINAL CREDIT
RISK RATING TO THE BOND'S CURRENT RISK PROFILE, INCLUDING, BUT NOT
LIMITED TO, YIELD-TO-MATURITY DRIFT AND CREDIT RATING SHIFTS;
(F) "INVESTOR RIGHT OF ACTION FOR VALUE DESTRUCTION" SHALL MEAN THE
LEGAL RIGHT OF AN INVESTOR TO SEEK DAMAGES IF THE BOND ISSUER FAILS TO
DISCLOSE MATERIAL CREDIT EVENTS OR IF A BOND'S CREDIT RISK DETERIORATES
WITHOUT PROPER DISCLOSURE, RESULTING IN FINANCIAL HARM TO THE INVESTOR;
AND
(G) "MATERIAL DEVIATION" SHALL MEAN A SIGNIFICANT CHANGE IN A BOND'S
CREDITWORTHINESS THAT DIFFERS FROM THE ISSUER'S ORIGINAL PROJECTIONS OR
CREDIT RATINGS, INCLUDING, BUT NOT LIMITED TO, A DROP IN CREDIT RATING
OR SIGNIFICANT CHANGE IN MARKET PRICE OR ARM'S-LENGTH VALUATION DUE TO A
MATERIAL CREDIT EVENT.
(H) "INTENTIONAL ACTION" SHALL MEAN ANY DELIBERATE ACT OR POLICY DECI-
SION BY ANY PUBLIC, PRIVATE, OR GOVERNMENTAL ENTITY THAT IS REASONABLY
FORESEEABLE TO MATERIALLY AND DISPROPORTIONATELY IMPAIR THE CREDITWOR-
THINESS, REPAYMENT, OR MARKET VALUE OF STATE-BACKED BONDS.
(I) "ARBITRARY ACTION" SHALL MEAN ANY ACTION OR POLICY DECISION LACK-
ING A RATIONAL OR REASONABLE BASIS THAT RESULTS IN THE MATERIAL AND
DISPROPORTIONATE DEVALUATION OF STATE-BACKED BONDS, INCLUDING ACTIONS
TAKEN WITHOUT DUE CONSIDERATION OF PREDICTABLE FISCAL IMPACTS ON THE
STATE'S DEBT OBLIGATIONS.
2. IT SHALL BE UNLAWFUL FOR ANY BROKER, DEALER, OR MUNICIPAL SECURI-
TIES DEALER TO ISSUE STATE OR MUNICIPAL BONDS UNLESS SUCH BROKER OR
DEALER IS IN COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION.
3. ALL ISSUERS OF STATE AND MUNICIPAL STATE-BACKED BONDS WITHIN THE
STATE SHALL FILE A QUARTERLY RISK RECONCILIATION STATEMENT WITH THE
DEPARTMENT IN ACCORDANCE WITH A FILING SCHEDULE TO BE PROMULGATED BY THE
DEPARTMENT. SUCH STATEMENTS SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
FOLLOWING:
(A) THE NAME AND ADDRESS OF THE ISSUING AUTHORITY;
(B) THE NAME AND PURPOSE OF THE PROJECT OR PROJECTS THE FUND IS TO BE
USED FOR;
(C) THE OFFERING PRICE, INTEREST RATE, SELLING COMPENSATION, AGGREGATE
PRINCIPAL AMOUNT, PRINCIPAL AMOUNT PER MATURITY, AND DELIVERY DATES OF
EACH BOND;
(D) UP-TO-DATE CREDIT RISK PROJECTIONS AND BOND RATINGS WHERE APPLICA-
BLE;
(E) YIELD-TO-MATURITY DRIFT AND ITS IMPLICATIONS ON BOND VALUATION;
(F) ANY MATERIAL CREDIT EVENTS WHICH HAVE OCCURRED OR HAVE IMPACTED
THE ISSUER'S CREDIT RISK DURING THE RELEVANT QUARTER; AND
(G) ANY OTHER DISCLOSURES REQUIRED BY STATE OR FEDERAL LAW.
4. NOTWITHSTANDING ANY LAWS TO THE CONTRARY, THE DEPARTMENT OF ECONOM-
IC DEVELOPMENT SHALL CREATE A SEARCHABLE DATABASE, OR MODIFY AN EXISTING
ONE, DISPLAYING THE QUARTERLY RISK RECONCILIATION STATEMENTS OF EACH
STATE-BACKED BOND ISSUER WITHIN THE STATE.
5. WHERE AN ISSUER, DEALER, OR BROKER OF STATE OR MUNICIPAL STATE-
BACKED BONDS FAILS TO DISCLOSE A MATERIAL CREDIT EVENT OR TO UPDATE SUCH
A. 8769--A 3
ISSUER, DEALER, OR BROKER'S RISK ASSESSMENTS ON ITS QUARTERLY RISK
RECONCILIATION STATEMENT, AS REQUIRED BY THIS SECTION, AN INVESTOR OR
BOND-HOLDER INJURED BY SUCH VIOLATION OF THIS SECTION MAY BRING SUIT IN
SUCH INVESTOR OR BOND-HOLDER'S OWN NAME. JUDGMENT MAY BE ENTERED IN THE
AMOUNT OF ACTUAL DAMAGES REFLECTING THE DIFFERENCE BETWEEN THE ACTUAL
AMOUNT PAID FOR THE BOND AND THE FAIR MARKET VALUE OF SUCH BOND, FOR
RESCISSION OF THE BOND PURCHASE, UPON WHICH THE ISSUER SHALL REFUND THE
INVESTOR'S ORIGINAL INVESTMENT, OR BOTH SUCH ACTIONS.
6. (A) THE DEPARTMENT SHALL HAVE THE AUTHORITY TO ENFORCE THE REQUIRE-
MENTS OF THIS SECTION. THE DEPARTMENT SHALL, FROM TIME TO TIME, CONDUCT
AUDITS OF RISK RECONCILIATION STATEMENTS FILED BY ISSUERS.
(B) IF AN ISSUER IS FOUND TO BE IN REPEATED VIOLATION OF THIS SECTION,
THE DEPARTMENT MAY, IN ITS DISCRETION, REFER SUCH ISSUER FOR INVESTI-
GATION BY THE STATE ATTORNEY GENERAL FOR THE PURPOSES OF DETERMINING
COMPENSATION OF DAMAGES TO ALL INVESTORS.
7. (A) THE ATTORNEY GENERAL MAY INITIATE INVESTIGATIONS AND
PROCEEDINGS AGAINST ANY ENTITY, PUBLIC, PRIVATE, OR GOVERNMENTAL, WHICH
CAUSES, BY ITS ACTIONS, MATERIAL DEVALUATION OF STATE-BACKED BONDS WHICH
DISPROPORTIONALLY HARM STATE-BACKED DEBT OBLIGATIONS. THE ATTORNEY
GENERAL MAY CONSIDER, BUT IS NOT LIMITED TO, THE FOLLOWING FACTORS:
(I) THE FORESEEABILITY OF THE IMPACT ON THE STATE'S BONDED DEBT;
(II) WHETHER REASONABLE ALTERNATIVES WERE AVAILABLE;
(III) THE PROPORTIONALITY OF THE IMPACT RELATIVE TO THE STATED PURPOSE
OF THE ACTION; AND
(IV) THE DEGREE OF TRANSPARENCY OR CONCEALMENT SURROUNDING THE ACTION.
(B) UPON A FINDING THAT A PUBLIC OR GOVERNMENTAL ENTITY HAS ENGAGED IN
AN INTENTIONAL ACTION OR ARBITRARY ACTION THAT MATERIALLY DEVALUES
STATE-BACKED BONDS, THE ATTORNEY GENERAL MAY:
(I) INITIATE LEGAL PROCEEDINGS TO ENJOIN SUCH ACTIONS;
(II) PURSUE CLAIMS FOR COMPENSATORY OR EQUITABLE RELIEF ON BEHALF OF
THE STATE OR ITS BONDHOLDERS; AND
(III) RECOVER DAMAGES TO OFFSET INCREASED BORROWING COSTS OR OTHER
FINANCIAL HARM INCURRED BY THE STATE AS A RESULT OF THE MATERIAL DEVALU-
ATION.
(C) THE ATTORNEY GENERAL SHALL HAVE STANDING TO BRING CLAIMS IN ANY
COURT OF COMPETENT JURISDICTION, WHETHER THE RESPONSIBLE PARTY IS WITHIN
OR OUTSIDE THE STATE, TO PROTECT NEW YORK'S CREDIT REPUTATION AND THE
VALUE OF ITS PUBLIC DEBT OBLIGATIONS.
(D) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO LIMIT ANY OTHER
CAUSE OF ACTION OR REMEDY AVAILABLE TO THE STATE UNDER LAW.
§ 3. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would have been enacted even if such
invalid provisions had not been included herein.
§ 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law. Effective immediately, the addition, amend-
ment and/or repeal of any rule or regulation necessary for the implemen-
tation of this act on its effective date are authorized to be made and
completed on or before such effective date.