broker Subscribe to RSS - broker

Proposed Rules: Closed to Comments (View Public Comments Received:1)

Agency:
Comment By: 
Wednesday, October 30, 2019
Proposed Rules Content: 

STATEMENT OF BASIS AND PURPOSE OF RULE

 

The TLC is proposing rules that would amend or add sections to the existing rules governing Medallion Broker Licenses and Taxicab Agent Licenses.  

Broker License Rule Amendments

            In April 1984, the City Council of the City of New York enacted Local Law No. 18 which added what is now section 19-527 of the Administrative Code of the City of New York. That section, in substance, (1) defines "Taxicab Broker" as one "who, for another… acts as an agent or intermediary in negotiating the purchase or sale of a taxicab" (Administrative Code §19-527[a]); (2) provides for the licensing of such brokers, the payment of an annual license fee of $500, the posting of a $50,000 bond for nonpayment of fines imposed by the Taxi and Limousine Commission (“TLC”) or judgements “by reason of any misrepresentations, fraud or deceit, or any unlawful act or omission of such licensee, his or her agents or employees” (Administrative Code §19-527[b], [c], [e]); and (3) granted TLC the power to impose a fine of up to $10,000, suspend or revoke a license for making a material misstatement or misrepresentation on a Taxicab Broker license application, committing a fraudulent, deceitful or unlawful act while acting as a Taxicab Broker, or violating any TLC rule (Administrative Code §19-527[f]).

 

            TLC’s rules implementing this local law, located at chapter 62 of Title 35 of the Rules of the City of New York, establish: (a) procedures for the licensing and supervision of an individual or business entity acting as a Taxicab Broker; (b) the qualifications, requirements, prohibitions, and procedures for getting and maintaining a Taxicab Broker's License; (c) rules of operation to protect Taxicab Brokers’ customers and the public; and (d) penalties for violations.

            In response to allegations of Broker misconduct, on May 20, 2019, Mayor de Blasio ordered a joint investigation by the TLC, Department of Finance and Department of Consumer and Worker Protection into Taxicab Brokers practices. The 45-day review was charged with identifying and penalizing Taxicab Brokers who violated existing TLC regulations and developing regulatory changes to address issues uncovered and unaddressed by the existing regulatory framework.

The report

[1]

detailing the findings of the joint investigation, includes a summary of identified TLC rule violations, which were forwarded to TLC’s Prosecution Division for enforcement and are currently the subject of ongoing administrative enforcement proceedings

[2]

, as well as a number of recommended changes to TLC rules in order to ensure that Taxicab Brokers are held to a higher standard going forward.

Specifically, the proposed changes:

·        

Revise penalties for violation of the TLC Broker rules to reflect the seriousness of the prohibited conduct;

·        

Extend the TLC-required record retention period for Taxicab Brokers from three years to ten years;

·        

Provide restitution to Brokers’ clients, as appropriate, for TLC rule violations;

·        

Clarify that TLC rules apply to all services offered by Brokers, including but not limited to medallion transfers, broker-facilitated financing or refinancing, and insurance;

·        

Strengthen Brokers’ obligations to disclose interests in TLC-issued taxicab licenses and related taxicab business services provided to their clients, through annual disclosure to TLC of Brokers’ interests;

·        

 Expand the required disclosure of interests to include any interests held by spouses, children and other relatives of the Broker;

·        

Require disclosure of actual conflicts in any transaction to be completed on a form provided by TLC;

·        

Require written agreements between Brokers and their clients specifying all fees and costs charged by the Broker, informing clients of the Broker’s duty to act in their interest, disclose any facts the Broker knows that impact the value of a medallion as well as all offers to purchase, and disclose any fees paid to the Broker by a third party;

·        

Require that Brokers submit to TLC completed broker agreements including all agreement attachments required by TLC rules and copies of closing statements completed on TLC-provided forms;

·        

Require that Brokers complete for their clients, and submit within 30 days to TLC, a plain language explanation of material loan terms for any financing or refinancing facilitated by Brokers.    

These steps will provide meaningful transparency improvements in the medallion purchasing process. However, they do not address bank or credit union lending practices s, which play a key role in the medallion market, but are regulated at the state and federal level.  To provide medallion purchasers with greater protection and transparency, continuing review of the adequacy of state and federal regulations and the sufficiency of their enforcement will be necessary.

Agent License Rule Amendments

          Outreach to owners as part of the Broker investigation revealed the need for additional regulations applicable to leases between businesses licensed as Taxicab Agents[3] and passive medallion owners.  This includes consistent and enforceable contracts as well as mandatory contract provisions informing passive medallion owners of their rights when working with a Taxicab Agent.  Additionally, numerous owners reported that agents they worked with failed to make timely medallion lease payments, and agreements they entered into allowed the Agent to reduce the medallion lease payment without the owner’s consent while also prohibiting owners from cancelling their lease agreements in such cases without significant penalties.  Finally, passive owners also expressed uncertainty about Agents’ obligation under TLC rules to pay applicable taxes and fees for medallions they manage.  The proposed rules address these issues and others by requiring that:

·        

Written medallion leases must specify lease amounts and frequency of lease payments, all costs and fees that the Agent may charge the owner, and Agent’s obligation to pay fees or taxes as required by TLC rules or the medallion lease agreement for all such fees or taxes incurred during the Agent’s management of the owner’s medallion.

·        

Written leases must include a provision allowing medallion owners to cancel the medallion lease agreement without penalty or cost if the Agent notifies the Owner of its intention to lower the medallion lease amount.

·        

Annual accountings to be prepared by Agents for medallion owners itemizing all taxes, fees, insurance and other costs paid by the Agent on behalf of the Medallion Owner.

·        

Agents provide restitution for any overcharges, underpayments, or missed payments and will face a penalty for failure to pay fees or taxes the Agent was required by TLC rules or the medallion lease agreement to pay.

Enforcement of New Regulations

 

            The investigation into Broker practices revealed the need for greater oversight into the business practices of Brokers, Agents and other TLC-regulated businesses.  To ensure that TLC-licensed businesses comply with TLC regulations, including the proposed regulations described above, TLC announced the formation of a Businesses Practices Accountability Unit (BPAU), which will be charged with ongoing monitoring of TLC-licensed businesses, detailed review of TLC-required annual disclosures as well as broker agreements and Broker-provided closing and loan disclosure statements for accuracy and  completeness, and investigation of complaints lodged against such entities.  TLC is currently staffing this new unit and anticipates BPAU will begin its work by the end of calendar year 2019. 

 

Additional Non-Regulatory Work

            The investigation into Broker practices also revealed that for current drivers who own their medallions, the largest single issue they face is unaffordable debt. The average median debt owed by surveyed drivers who own their medallions is approximately $500,000, well above the prices medallions regularly sell for today on the secondary market. Because of loan refinancing, drivers who purchased their medallions years ago at lower prices also often carry significant debt. Fifty-one-percent of surveyed drivers who own their medallions stated they struggle to pay their monthly bills and 26% stated they are considering bankruptcy. However, only 15% of surveyed drivers who own their medallions indicated their lender has lowered the monthly payments or reduced the loan principal.

            To address these financial challenges facing many TLC licensees, the City is preparing to open a new Driver Assistance Center to serve as a central location where licensees can make appointments and receive free services from the TLC and other agency partners.  At the Center, licensees will find on-site staff offering financial counseling and debt restructuring assistance, financial advocacy for those negotiating loan refinancing, referrals to mental health services and screening for public benefits. The Center will be located at TLC’s Long Island City facility and will be open to all TLC licensed drivers. 


[2]

Upon the resolution of these enforcement actions, TLC will create and maintain on the TLC website a list of enforcement actions against brokers to further increase transparency for prospective buyers and sellers.

[3]

Taxicab Agents are business entities that operate or facilitate the operation of one or more taxicab medallions on behalf of the taxicab medallion owner.

Subject: 

Proposed Taxicab Broker Rules

Location: 
TLC Commission Meeting Room
33 Beaver Street 19th Floor
New York, NY 10004

Proposed Rules: Closed to Comments

Agency:
Comment By: 
Friday, March 8, 2013
Proposed Rules Content: 

 

 

Statement of Basis and Purpose of Proposed Rule

 

 

Under section §2101 of the New York City Charter, the Business Integrity Commission (BIC) is authorized to regulate the trade waste industry. To ensure trade waste businesses operate free of organized crime and corruption, BIC regulates both the providers of trade waste collection services and the trade waste brokers. As provided in Administrative Code Title 16-A, § 16-504(a), BIC regulates the issuance, suspension and revocation of registrations for trade waste brokers. Under § 16-504(i), BIC is authorized to promulgate rules the Commission deems necessary and appropriate to effectively regulate the waste removal industry, including the regulation of trade waste brokers.

 

These proposed rule amendments are designed to improve BIC’s capacity to properly regulate the trade waste broker community and to ensure trade waste brokers are operating fairly and free of corruption. The proposed amendments will also ensure BIC’s rules are fair across the trade waste industry, by making rules and requirements for trade waste brokers more consistent with those of licensed providers of trade waste removal collection or disposal services, as enumerated in Title 17 Subchapter E of the Rules of the City of New York.

 

Specifically, the proposed amendments will require trade waste brokers to follow BIC rules whether they are working with licensees or registrants.

 

The amendments will also require trade waste brokers to follow record keeping and record reporting requirements comparable to the requirements of licensees, including:

 

  • Maintenance and production of accounting records, including cash receivable and cash disbursement journals, payroll records, general ledgers, customer subsidiary ledgers, accounts payable ledgers and other accounting records;
  • Maintenance and production of customer information;
  • Maintenance and production of annual financial statements;
  • Maintenance and production of an annual report;
  • Maintenance and production of the broker’s Customer Register; and
  • Maintenance and production of complaints made against the broker.

 

The amendments also define the requirements for agreements and contracts with customers for broker services. The proposed amendments address the information that must be included in contracts between brokers and customers, as well as the duration of such contracts. Specifically, contracts entered into after the effective date of this rule may not exceed two years in duration. Contracts entered into prior to the effective date of the rule will be deemed to terminate no later than two years following the rule’s effective date. Additionally, any written contracts without a termination date will be deemed terminable at will by either party upon fourteen days written notice. Oral agreements between customers and a trade waste brokers must be deemed terminable at will by either party upon fourteen days written notice to the other party. In no instance may a broker terminate services or raise rates without at least fourteen days written notice to the customer.

 

Under the amendments, Commission approval will now be required before subcontracting or assigning broker services and before any sales, mergers or acquisitions of trade waste brokerages involving other businesses under BIC’s jurisdiction.

 

 

In this proposed rulemaking, the Business Integrity Commission is also amending the fee for Commission review of any proposed asset sale, assignment of contract, merger, acquisition, or similar transaction by a licensee to reflect the most recent user cost analysis. The same fee structure will now be applied to transactions by registered trade waste brokers to ensure the marketplace is run fairly and free from criminal influence.

 

Nothing in these proposed amendments to subchapter F relating to trade waste brokers is intended to alter or affect the meaning or application of the requirements for licensees as provided in subchapter E of these rules as interpreted by the Commission.

 

 

Subject: 

Opportunity to comment on the proposed amendment by the Business Integrity Commission of rules relating to trade waste broker regulations.

Location: 
New York City Business Integrity Commission
100 Church Street, 20th Floor, Conference Room 1
New York, NY 10007
Contact: 

Joanna Weiss
Chief Program Officer
jweiss@bic.nyc.gov
(212) 676-6292

Download Copy of Proposed Rule (.pdf):