On September 20, 2021, the North American Securities Administrators Association (NASAA) announced its findings from a series of 1,206 coordinated examinations of state-registered investment advisers. NASAA found that nearly 59 percent of the investment advisers did not have policies or procedures in place for addressing the financial exploitation of seniors and vulnerable persons.
The examinations covered 42 jurisdictions in the U.S. and were conducted virtually. The exams occurred between January 1 and July 7, 2021. Of the firms included in the sweeps, 289 Registered Investment Advisers (RIAs) were examined by state securities examiners for the first time, and roughly 68 percent of them only had one Investment Adviser Representative (IAR).
Sixty-seven percent of the asset-managing investment advisers had assets-under-management (AUM) of between $30 million and $100 million. Thirty-three percent held AUM of less than $30 million.
Findings from NASAA’s examinations sweeps
The results of this multi-state initiative show that Registered Investment Advisers (RIAs) must make improvements in recognizing and reporting cases of suspected abuse. NASAA’s goal is to foster earlier detection and more reporting of suspected financial exploitation of older Americans.
According to NASAA, the top five deficiency areas were:
- Registrations (44 percent);
- Books and records (41.7 percent);
- Contracts (30.5 percent);
- Supervision/Compliance (29.5 percent); and
- Advertising (19.7 percent).
In the registration area, examiners found that over 20 percent of the RIAs examined provided inconsistent information on Form ADV Part 1 and 2. In the books and records area, over 20 percent of the examined advisers’ suitability information was lacking. Examiners found that over 17 percent of the
About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Delray Beach, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.