Recently, the North American Securities Administrators Association (NASAA) published its annual enforcement report based on 2016 data. NASAA’s enforcement statistics demonstrate that state securities regulators are taking aggressive steps to protect the integrity of markets and to prevent investors from becoming fraud victims.
According to the Enforcement Report, NASAA members received more than 9,300 complaints in 2016. More than 4,300 investigations were conducted by NASAA members, which led to over 2,000 enforcement actions.
These enforcement actions obtained over $230 million in monetary relief for investors and resulted in more than 3,500 license sanctions. Sanctions imposed by NASAA members in the United States included:
- Bans on future activity;
- Bans from trading securities;
- Financial penalties; and
- Prison sentences.
NASAA coordinates its enforcement efforts with other agencies to enhance their collective ability to protect investors. Among others, NASAA shared intelligence with the SEC and FINRA. NASAA also exchanged evidence with the FBI and the IRS, as well as federal and state prosecutors.
NASAA and its members remain focused on protecting senior investors. Thirteen jurisdictions have passed legislation based upon the NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation. More states are likely to pass similar legislation. NASAA members reported bringing formal enforcement actions involving more than 1,000 senior investors.
The Enforcement Report also discussed NASAA members’ scrutiny of bad actors in the licensed securities industry. State securities regulators reported that they conducted 700 investigations involving Registered Investment Advisers (RIAs) and their representatives, a 31 percent increase. The report attributed this increase, in part, to greater state interest in individuals and RIAs that made the transition in recent years from broker-dealer to investment adviser registration.
The Enforcement Report is available Here.
SEC-registered advisers will also benefit from reading the report, because regulators often share the same priorities as part of their concerted effort to protect investors.