NASAA Releases 2018 Enforcement Report

The North American Securities Administrators Association (NASAA) recently released its 2018 Enforcement Report based on 2017 data collected from 51 NASAA U.S. members. NASAA reported that state securities regulators conducted 4,790 investigations in 2017 and took 2,105 enforcement actions overall.

In 2017, NASAA U.S. members reported nearly $486 million in restitution ordered returned to investors and nearly $79 million in fines/penalties. The NASAA was also focused on criminal relief, in which it represented that it contributed to 1,551 years of incarceration and 434 years of probation.

NASAA’s 2018 Enforcement Survey revealed that seniors remain a primary target of fraudsters. NASAA U.S. member jurisdictions reported bringing formal enforcement actions involving more than 1,100 senior victims in 2017, demonstrating an unwavering commitment to protecting senior investors.

This year’s enforcement survey also reflected a large increase in enforcement actions against unregistered individuals and firms. NASAA U.S. members reported actions in 2017 against 675 unregistered individuals and firms (an increase of 24 percent over the prior year) and 647 registered individuals and firms (a 9 percent increase).

The surge in cases against unregistered actors reversed a two-year trend in which registered individuals and firms in the securities industry (broker-dealers and investment advisers) had constituted the majority of respondents in state enforcement actions. Last year was also the first time in which investment adviser (IA) firms and representatives significantly outnumbered broker-dealer (BD) firms and agents as respondents in state enforcement actions.

From 2014 to 2016, NASAA U.S. members reported taking actions against roughly an even number of BD firms and agents and IA firms and representatives. In 2016, however, participating jurisdictions reported that the number of IA firms and representatives under investigation had increased by nearly a third year-over-year. Those investigations came to fruition in 2017, resulting in 377 IA firms and representatives named in enforcement actions, a 32 percent increase over the prior year. In contrast, the number of BD firms and agents named as respondents in 2017 enforcement actions fell to 270, an 11 percent decline year-over-year.

Overall, state securities regulators continued to take strong steps to prevent bad actors from operating within the licensed securities industry, and to condition the activity of licensees and registrants. In 2017, NASAA U.S. members revoked, barred or suspended the licenses/registrations of more than 300 individuals and firms, and denied or conditioned the licenses/registrations of more than 575 others.

To read the complete NASSA 2018 Enforcement Report, click here.