In an effort to protect pensioners and other potential victims of securities fraud, Local 237 joined with a coalition of union leaders, legislators and legal experts to call for passage of a bill that would give new authority to large institutional investors to sue for violations of securities law.

The bill, S.5768/A.8646, introduced by Assemblyman Richard Brodsky and State Sen. Eric T. Schneiderman, would amend the Martin Act, the state’s main securities fraud law, to allow pension funds with 500 or more members, including the New York City Employees Retirement System (NYCERS), to sue banks and financial institutions for fraudulent practices that lead to the loss of assets in the funds. Currently, the state attorney general has broad powers to prevent fraudulent securities practice, but investors have no right to action when the state’s securities laws are violated.

President Gregory Floyd, who serves as a trustee to the Board of NYCERS, spoke in support of the bill at a press conference held by the United Federation of Teachers on Wall Street on May 18, and at a forum held by the American Constitution Society for Law and Policy on May 21 to discuss the strengths and weaknesses of the bill.

“The pensions of average union workers are under attack,” said Floyd at the press conference and the forum.

“The average pensioner gets about $23,000 a year, but too often you hear reports about padded pensions, saying workers are getting $200,000 a year. I’ll never see that,” he quipped.

”Floyd emphasized that the new law would put cheating securities dealers on notice that “If you defraud us, you will be sued...We must pass this bill.”

Noting that “pensions are deferred wages to public employees,” James Parrott, deputy director and chief economist, Fiscal Policy Institute, said, “Legal action that improves investor confidence” is especially needed as the median wage has dropped by 10 percent since the 1990s and the wealthiest 5 percent of Americans grew 5 times faster in the same period.

Total losses suffered in 2009 by the New York City and State pension funds were $102 billion, according to an estimate by the Fiscal Policy Institute. Another estimate released at the forum put the losses at “well over $144 billion.”

Explaining the pros and cons of the bill, Brodsky emphasized that its purpose is to tell would-be frauds that “If you steal from me I want my money back.”

He also noted that investment firms are threatening to move out of the state if the Martin Act is expanded.

The bill, which would include those who aid and abet fraudulent investment practices, is perceived as an attack on accountants and attorneys who would benefit from participating in malpractice. “There’s been meekness up until now. Don’t leave the field to the bad guys,” urged Brodsky.

Under current federal law, investors may make damage claims in federal court under the Private Securities Litigation Reform Act, but there is no such avenue for state securities laws. New York State, a center for the global financial industry, and Rhode Island are the only two states that do not have the right to bring damage claims against fraudulent securities firms.

The legislation is fully supported by the New York State and City comptrollers as well as a broad coalition of labor leaders.