NY State Senate Bill 2025-S8408

Current Bill Status - Passed Senate & Assembly

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 13, 2025	returned to senate passed assembly ordered to third reading rules cal.696 substituted for a8804
Jun 12, 2025	referred to ways and means delivered to assembly passed senate ordered to third reading cal.1945
Jun 09, 2025	referred to rules

Votes

- Jun 12, 2025 - Floor Vote
  S8408
  
  59
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  4
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 12, 2025
      
      aye (59)
      
      Addabbo Jr.
      
      Ashby
      
      Bailey
      
      Baskin
      
      Borrello
      
      Brisport
      
      Brouk
      
      Bynoe
      
      Canzoneri-Fitzpatrick
      
      Chan
      
      Cleare
      
      Comrie
      
      Cooney
      
      Fahy
      
      Fernandez
      
      Gallivan
      
      Gianaris
      
      Gonzalez
      
      Gounardes
      
      Griffo
      
      Harckham
      
      Helming
      
      Hinchey
      
      Hoylman-Sigal
      
      Jackson
      
      Kavanagh
      
      Krueger
      
      Lanza
      
      Liu
      
      Martinez
      
      Martins
      
      Mattera
      
      May
      
      Mayer
      
      O'Mara
      
      Oberacker
      
      Ortt
      
      Palumbo
      
      Parker
      
      Persaud
      
      Rhoads
      
      Rivera
      
      Rolison
      
      Ryan
      
      Ryan
      
      Salazar
      
      Sanders Jr.
      
      Scarcella-Spanton
      
      Sepúlveda
      
      Serrano
      
      Skoufis
      
      Stavisky
      
      Stec
      
      Stewart-Cousins
      
      Tedisco
      
      Walczyk
      
      Webb
      
      Weber
      
      Weik
      
      excused (4)
      
      Murray
      
      Myrie
      
      Ramos
      
      Sutton
      
      The following Member(s) participated via videoconferencing: Brouk

2025-S8408 (ACTIVE) - Details

See Assembly Version of this Bill:: A8804
Law Section:: Financial Services Law
Laws Affected:: Amd §§305, 404 & 409, add §408-a, Fin Serv L

2025-S8408 (ACTIVE) - Summary

Provides that persons engaged in activity for which a license or other authorization from the superintendent of financial services is required under the banking law or financial services law will be subject to a civil penalty.

2025-S8408 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S8408

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the financial services law, in relation to prohibited
unlicensed activities

 
PURPOSE OF THE BILL:

This bill will resolve faults in penalty provisions of the Banking Law
("BL") and Financial Services Law ("FSL") that illogically advantage
persons who disregard licensing, registration, and similar authorization
requirements over those persons who comply with such requirements. The
bill does this imposing a penalty for a "prohibited unlicensed act,"
which is defined as (1) " 
Engaging in an activity in this state for
which a license, certification, registration, authorization, charter,
accreditation or incorporation is required by" the FSL or the BL, or the
regulations promulgated thereunder, without being so authorized, and (2)
"any act or omission by a person who is required by (the FSL or the BL
or the regulations promulgated thereunder, to be" authorized by to do
such business and is not so authorized, "if such act or omission would

constitute a violation of (the FSL or the BL) or the regulations promul-
gated thereunder, subject to monetary penalty if such person were so
(authorized)."

 
SUMMARY OF PROVISIONS:

Section 1 states the purpose of the bill.

Section 2 provides that the Superintendent of Financial Services may
hold adjudicatory proceedings to assess civil penalties against persons
who have committed prohibited unlicensed acts, as the Superintendent
currently may do for other violations of the BL and FSL.

Section 3 authorizes the Superintendent of Financial Services to inves-
tigate activities that may constitute prohibited unlicensed acts, as the
Superintendent currently may do with respect to other activities within
the Superintendent's jurisdiction.

Section 4 creates a new section of law, FSL § 408-a, which defines
"prohibited unlicensed act" and establishes the applicable penalties,
which may be assessed by the Superintendent after notice and a hearing.
The penalties are as follows

For a prohibited unlicensed act that relates to the requirements of the
BL or the regulations promulgated thereunder, a new § 408-a(a)(1) estab-
lishes that the penalty is the same as the penalty provided in BL § 44
for any violation of the BL. This is consistent with the policy
expressed in existing FSL § 408(a)(3)(A)

For a prohibited unlicensed act that relates to the requirements of the
FSL or the regulations promulgated thereunder, a new FSL § 408-a(a)(2)
establishes that the penalty is the same as the penalty provided for in
FSL § 408(a) for violations of the FSL or the regulations promulgated
thereunder.

Additionally, for a prohibited unlicensed act that results in consumer
harm, the Superintendent may impose a penalty up to double the amount
applicable to such violation provided in FSL §§ 408- a(a)(1) and (a)(2),
and the Superintendent may order restitution.

Consistent with exiting law, FSL § 408(a)(3)(B), section 4 of the bill
also provides that a particular act or omission constituting a prohibit-
ed unlicensed act cannot be penalized twice. If the Superintendent
imposes a fine for a prohibited unlicensed act pursuant to FSL §
408-a(a)(1) (providing for penalties in connection with BL violations),
the Superintendent may not additionally impose a penalty for the same
act or omission pursuant to FSL § 408-a(a)(2) (providing for penalties
in connection with FSL violations). If the Superintendent imposes a
penalty pursuant to FSL § 408(a)(1) or (2), the Superintendent may not
impose a penalty pursuant to FSL § 408-a(a)(2).

Also consistent with existing law, this section establishes that the
civil penalties that the Superintendent collects for prohibited unli-
censed acts must be applied in the same manner as civil penalties
received by the Superintendent for other violations of the FSL.

Section 5 of the bill provides, consistent with existing law, that if
the Superintendent believes that a violation of the newly created FSL

§ 408-a has been attempted or committed, the Superintendent, in their
discretion, may report such activity to the appropriate licensing
authority or district attorney or to the New York State Attorney Gener-
al.

Section 6 of the bill provides an immediate effective date.

 
JUSTIFICATION:

Currently, unlicensed entities engaging in most types of business
requiring a license under the Banking Law and certain types of business
requiring a license under the Financial Services Law and regulations are
not subject to the Superintendent's power to impose civil monetary
penalties for a failure to be properly licensed or for violations of
other provisions of the Banking Law and Financial Services Law that
govern the conduct of those businesses. In other words, a person or
entity lacking a required license is not subject to penalty for acts
that would constitute violations subject to penalty if the person did
have proper authorization. Furthermore, the entity is not subject to a
financial penalty for failure to be properly licensed. This bill will
resolve these faults that disincentivize compliance with licensing
requirements by illogically advantaging persons who disregard licensing,
registration, and similar authorization requirements over those persons
who comply with such requirements by obtaining proper authorization and
subjecting themselves to Departmental supervision.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

None.   
EFFECTIVE DATE:
Immediate

2025-S8408 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8408
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               June 9, 2025
                                ___________
 
 Introduced by Sen. KRUEGER -- (at request of the Department of Financial
   Services)  --  read  twice and ordered printed, and when printed to be
   committed to the Committee on Rules
 
 AN ACT to amend the financial services law, in  relation  to  prohibited
   unlicensed activities

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative findings. The  legislature  finds  that  it  is
 essential  to the protection of users of financial products and services
 from imprudent conduct and harmful business practices in  the  financial
 services  marketplace  that  all persons offering financial products and
 services in New York State be sufficiently  deterred  from  disregarding
 the laws and regulations governing the offering of financial products or
 services, regardless of whether they are properly licensed or authorized
 otherwise  to  do business. Furthermore, to ensure that the business of,
 and the persons providing, financial products and services are appropri-
 ately supervised, the law should not  advantage  persons  who  disregard
 such  requirements.  Currently,  as to engagement in many activities for
 which a license or other authorization from the superintendent of finan-
 cial services is required by the banking law or financial  services  law
 or  the  regulations  promulgated thereunder, an unlicensed or otherwise
 unauthorized person not exempt from licensing or other authorization  is
 not  subject  to  civil  monetary penalty for acts that would constitute
 violations subject to penalty if the person were licensed  or  otherwise
 authorized. This act provides that persons engaged in activity for which
 a  license  or  other authorization from the superintendent of financial
 services is required under the banking law  or  financial  services  law
 will  be  subject  to  a civil penalty for conducting such activity in a
 manner inconsistent with the law, regardless of whether such  person  is
 licensed or otherwise authorized to do such activity.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10329-02-5
 S. 8408                             2

 
   §  2. Subsections (a) and (b) of section 305 of the financial services
 law are amended to read as follows:
   (a)  Unless  otherwise  provided in this chapter, the banking law, the
 insurance law or any other law, any hearing pursuant to any such law may
 be held before the superintendent, any  deputy  superintendent,  or  any
 designated  salaried employee of the department authorized by the super-
 intendent for such purpose. Any adjudicatory proceeding,  including  any
 hearings  to  assess civil penalties under section four hundred eight OR
 FOUR HUNDRED EIGHT-A of this chapter, held pursuant to the provisions of
 this chapter, the insurance law or the banking  law  shall  be  noticed,
 conducted  and  administered in compliance with the state administrative
 procedure act.
   (b) The person conducting such hearing shall have power to  administer
 oaths,  examine  and  cross-examine  witnesses  and  receive documentary
 evidence, and shall report [his or her] SUCH PERSON'S  findings,  orally
 or  in  writing,  to  the superintendent with or without recommendation.
 Such report, if adopted by the superintendent may be the  basis  of  any
 determination  made by the superintendent. One hundred twenty days after
 the effective date of a determination of liability for a  civil  penalty
 pursuant  to  section four hundred eight OR FOUR HUNDRED EIGHT-A of this
 chapter or four hundred three, one thousand one hundred two,  two  thou-
 sand  one  hundred two, two thousand one hundred seventeen, two thousand
 one hundred thirty-three or seven thousand eight hundred sixteen of  the
 insurance  law,  such determination of liability for a civil penalty may
 be entered as a judgment and enforced, without court proceedings, in the
 same manner as the enforcement of a money judgment in civil  actions  in
 any  court of competent jurisdiction or any other place provided for the
 entry of civil judgment within this state.
   § 3. Subsection (a) of section 404 of the financial  services  law  is
 amended to read as follows:
   (a)  The  superintendent has authority under this article, the banking
 law, the insurance law and other applicable laws to  investigate  activ-
 ities  that  may  constitute  violations subject to section four hundred
 eight OR FOUR HUNDRED EIGHT-A of  this  article  or  violations  of  the
 insurance law or banking law and to develop evidence thereon.
   §  4.  The  financial  services law is amended by adding a new section
 408-a to read as follows:
   § 408-A. UNLICENSED ACTIVITIES PROHIBITED. (A)  FOR  THE  PURPOSES  OF
 THIS SECTION, A "PROHIBITED UNLICENSED ACT" SHALL MEAN:
   (1) ENGAGING IN AN ACTIVITY IN THIS STATE FOR WHICH A LICENSE, CERTIF-
 ICATION, REGISTRATION, AUTHORIZATION, CHARTER, ACCREDITATION OR INCORPO-
 RATION  IS  REQUIRED  BY  THIS  CHAPTER OR THE BANKING LAW, OR THE REGU-
 LATIONS PROMULGATED THEREUNDER,  WITHOUT  SUCH  LICENSE,  CERTIFICATION,
 REGISTRATION,  AUTHORIZATION, CHARTER, ACCREDITATION OR INCORPORATION OR
 AN EXEMPTION FROM SUCH REQUIREMENT; OR
   (2) ANY ACT OR OMISSION BY A PERSON WHO IS REQUIRED BY THIS CHAPTER OR
 THE BANKING LAW,  OR  THE  REGULATIONS  PROMULGATED  THEREUNDER,  TO  BE
 LICENSED,  CERTIFIED,  REGISTERED,  AUTHORIZED, CHARTERED, ACCREDITED OR
 INCORPORATED AND IS NOT SO LICENSED, CERTIFIED, REGISTERED,  AUTHORIZED,
 CHARTERED,  ACCREDITED  OR  INCORPORATED, OR EXEMPTED FROM SUCH REQUIRE-
 MENT, IF SUCH ACT OR OMISSION WOULD CONSTITUTE A VIOLATION OF THIS CHAP-
 TER OR THE BANKING  LAW,  OR  THE  REGULATIONS  PROMULGATED  THEREUNDER,
 SUBJECT  TO MONETARY PENALTY IF SUCH PERSON WERE SO LICENSED, CERTIFIED,
 REGISTERED, AUTHORIZED, CHARTERED, ACCREDITED OR INCORPORATED.
 S. 8408                             3
 
   (B) IN ADDITION TO ANY CIVIL OR CRIMINAL LIABILITY  PROVIDED  BY  LAW,
 THE SUPERINTENDENT MAY, AFTER NOTICE AND A HEARING, LEVY A CIVIL PENALTY
 FOR ANY PROHIBITED UNLICENSED ACT AS FOLLOWS:
   (1)  THE  PENALTY  FOR A PROHIBITED UNLICENSED ACT THAT RELATES TO THE
 REQUIREMENTS OF THE BANKING LAW OR THE  REGULATIONS  PROMULGATED  THERE-
 UNDER SHALL BE THE SAME AS THE PENALTY PROVIDED IN SECTION FORTY-FOUR OF
 THE BANKING LAW FOR ANY VIOLATION OF THE BANKING LAW.
   (2)  THE  PENALTY  FOR A PROHIBITED UNLICENSED ACT THAT RELATES TO THE
 REQUIREMENTS OF THIS CHAPTER OR THE REGULATIONS  PROMULGATED  THEREUNDER
 SHALL  BE  THE  SAME AS THE PENALTY PROVIDED FOR IN SECTION FOUR HUNDRED
 EIGHT OF THIS ARTICLE FOR VIOLATIONS OF THIS CHAPTER OR THE  REGULATIONS
 PROMULGATED  THEREUNDER. HOWEVER, THE SUPERINTENDENT SHALL NOT IMPOSE OR
 COLLECT ANY PENALTY FOR A PROHIBITED UNLICENSED  ACT  PURSUANT  TO  THIS
 PARAGRAPH IF THE SUPERINTENDENT IMPOSES OR COLLECTS ANY PENALTY PURSUANT
 TO  PARAGRAPH  ONE  OF  THIS  SUBSECTION  OR  PARAGRAPHS TWO OR THREE OF
 SUBSECTION (A) OF SECTION FOUR HUNDRED EIGHT OF  THIS  ARTICLE  FOR  THE
 SAME ACT OR OMISSION.
   (3)  IF  A  PROHIBITED  UNLICENSED  ACT  RESULTS IN CONSUMER HARM, THE
 PENALTY SHALL BE NOT MORE THAN DOUBLE THE PENALTY AMOUNT  APPLICABLE  TO
 SUCH VIOLATION SET FORTH IN PARAGRAPHS ONE AND TWO OF THIS SUBSECTION.
   (C)  CIVIL  PENALTIES  RECEIVED BY THE SUPERINTENDENT PURSUANT TO THIS
 SECTION SHALL BE APPLIED IN THE SAME MANNER AS CIVIL PENALTIES  RECEIVED
 BY  THE  SUPERINTENDENT  PURSUANT  TO SECTION FOUR HUNDRED EIGHT OF THIS
 CHAPTER.
   (D) IN ADDITION TO ANY OTHER PENALTY OR SANCTION IMPOSED UPON A PERSON
 BY LAW FOR A PROHIBITED UNLICENSED ACT, AFTER NOTICE AND A HEARING,  THE
 SUPERINTENDENT  MAY ISSUE AN ORDER DIRECTING SUCH PERSON TO PAY RESTITU-
 TION FOR SUCH UNLICENSED ACT.
   § 5. Subsection (a) of section 409 of the financial  services  law  is
 amended to read as follows:
   (a)  Whenever the superintendent is satisfied that a violation subject
 to section four hundred eight OR FOUR HUNDRED EIGHT-A of this article or
 fraud or other criminal activity under the insurance law or banking  law
 has  been  committed  or  attempted, the superintendent shall report any
 such violation of law, as the superintendent deems appropriate,  to  the
 appropriate  licensing  agency,  the  district attorney of the county in
 which such acts were committed,  to  the  attorney  general,  and  where
 appropriate, to the person who submitted the report of fraudulent activ-
 ity,  as  provided by the provisions of this article. Within one hundred
 twenty days of receipt of  the  superintendent's  report,  the  attorney
 general  or the district attorney concerned shall inform the superinten-
 dent as to the status of the reported violations.
   § 6. This act shall take effect immediately.

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Senate Bill S8408

Sponsored By

Current Bill Status - Passed Senate & Assembly

Jun 12, 2025 - Floor Vote

Floor Vote: Jun 12, 2025

2025-S8408 (ACTIVE) - Details

2025-S8408 (ACTIVE) - Summary

2025-S8408 (ACTIVE) - Sponsor Memo

2025-S8408 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S8408

Share this bill

Sponsored By

Liz Krueger

Current Bill Status - Passed Senate & Assembly

2025-S8408 (ACTIVE) - Details

2025-S8408 (ACTIVE) - Summary

2025-S8408 (ACTIVE) - Sponsor Memo

2025-S8408 (ACTIVE) - Bill Text download pdf

Comments