N.Y. GBS Law § 339-E

§ 339-e. Hypothecation of customer's securities. Any person, firm,\nassociation or corporation engaged in the business of purchasing and\nselling as a broker or dealer stocks, bonds or other evidences of debt\nof corporations, companies or associations, who\n 1. Having in his or its possession, for safe keeping or otherwise,\nstocks, bonds or other evidences of debt of a corporation, company or\nassociation belonging to a customer, without having any lien thereon or\nany special property therein, pledges or disposes thereof without such\ncustomer's consent; or\n 2. Having in his or its possession stocks, bonds or other evidences of\ndebt of a corporation, company or association belonging to a customer on\nwhich he or it has a lien for indebtedness due to him or it by the\ncustomer, pledges the same for more than the amount due to him or it\nthereon, or otherwise disposes thereof for his or its own benefit,\nwithout the customer's consent, and without having in his or its\npossession or subject to his or its control, stocks, bonds or other\nevidences of debt of the kind and amount to which the customer is then\nentitled, for delivery to him upon his demand therefor and tender of the\namount due thereon, is guilty of a misdemeanor.\n