N.Y. Financial Services Law Section 501
Restrictions on officers and employees of the department

  • penalty


No officer or employee of the department shall obtain a loan or extension of credit from any regulated person or be interested in any such regulated person as a director, partner, owner, officer, attorney, agent, trustee or employee, or own or deal in, either directly or indirectly, the stocks or obligations of any such regulated person. A violation of the provisions of this section by any officer or employee shall constitute sufficient grounds for his or her removal by the superintendent.


Nothing in this section shall be construed to prohibit any officer or employee from obtaining financing from a regulated person upon his or her primary or secondary residence, provided that the premises securing such loan are occupied by such employee, and further provided that such loan is reported to the department, which shall keep a record thereof. The term “residence,” for the purposes of this section, shall mean a single family or two family residence, condominium apartment or cooperative apartment, occupied in whole or in part, by the officer or employee. The term “cooperative apartment” means a residence where ownership is evidenced by certificates of stock or other evidence of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of real estate.


Nothing in this section shall be construed to prohibit any officer or employee from:


obtaining a loan secured by an assignment of his or her deposit in a banking organization, or an assignment or pledge of his or her shares in a savings and loan association or credit union;


accepting financing of an automobile, truck or other personal property from a banking organization or a sales finance company;


entering into a premium finance agreement with a premium finance agency; or


owning shares of an investment company (mutual fund) that may incidentally invest in the securities of any regulated person, provided that the purpose of the investment portfolio of such investment company may not be to invest primarily or exclusively in the securities of banking or insurance entities. For purposes of this section, investment companies include open-end and closed-end investment companies and unit investment trusts as those terms are defined in an Act of Congress entitled “The Investment Company Act of 1940,” as amended.


Nothing in this section shall be construed to prevent any officer or employee from becoming a policyholder of any insurer or from taking out a loan under the officer’s or employee’s insurance policy, or prevent or impair the ability of the superintendent to act as a liquidator, rehabilitator, or conservator pursuant to article seventy-four of the insurance law or article thirteen of the banking law.


The superintendent may promulgate policies and procedures for exempting particular employees, or classes of employees, from investment restrictions in subsection (a) of this section as to regulated persons with which such employee or class of employees has no authority or involvement.


This section shall not apply to investments held in a blind trust approved by the superintendent or the superintendent’s designee.

Source: Section 501 — Restrictions on officers and employees of the department; penalty, https://www.­nysenate.­gov/legislation/laws/FIS/501 (updated Sep. 22, 2014; accessed Sep. 23, 2023).

Sep. 23, 2023

Last modified:
Sep. 22, 2014

§ 501’s source at nysenate​.gov

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