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Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.4453 (Savino)/A.815 (Abinanti)

Support

SUBJECT:

Expansion of state “whistleblower" statute

 

DATE:

June 17, 2014

 

The Business Council opposes this legislation that would significantly expand the state's existing “whistleblower" protections.

The bill proposes to expand the definition of alleged violations that would be the basis for disclosure protection, and to extend such provisions to an extremely broadly defined category of “financial institutions."

We believe the bill is excessively broad, and would pose real compliance issues for business due to uncertain definitions. Moreover, we question its need given existing statute.

The bill's broad definition of “financial institution" would capture, or allow the Department of Financial Services' regulations to capture, a wide range of business categories that go well beyond what is usually considered to be in that sector. As example, it extends to any business that is a “redeemer" of travelers' checks, bank checks or money orders – a definition that could apply to virtually any retail business. Further, it allows the DFS, through regulation, to extend the scope of this law to “any business . . . which engages in any activity . . . which is similar to, related to or a substitute for" activities performed by any of the twenty-four business sectors specified in the bill.

The need for this legislation in the banking and financial services sectors is also unclear. Employees at “traditional" financial institutions are already protected under federal law. Section 1057 of the “Dodd-Frank Wall Street Reform and Consumer Protection Act," adopted in 2011, prohibits banks and other consumer financial services providers from retaliating against an employee for providing information to an employer, a regulatory agency, or law enforcement agency about a reasonably perceived violation of a consumer financial protection law or a regulation of the Bureau of Consumer Financial Protection (CFPB).

As was the case in prior whistleblower legislation, we are also concerned that such provisions allow employees to simply bypass existing internal reporting mechanisms designed to assure compliance.

Finally, there seems to be a significant mis-match between between some of the listed categories of “financial institutions" such as vehicle sales, and the types of violations being targeted (i.e., securities law.)

For these reasons, the Business Council respectfully opposes approval of  S.4453/A.815.