The California Department of Financial Protection & Innovation recently posted its 2023 Annual Report to the Legislature regarding its broker-dealer and investment adviser programs. The report's title is a bit of a misnomer as most of the data in the report are for the 2021-2022 fiscal year (the State's fiscal year end is June 30).
I noted that the number of broker-dealers and investment advisers licensed by the state has been consistently decreasing over the last three fiscal years while the numbers of investment adviser representatives and broker-dealer agents have trended in the opposite direction:
|
|
2019-20 |
2020-21 |
2021-22 |
|
Investment Adviser Firms |
3,743 |
3,734 |
3,675 |
|
Investment Adviser Representatives |
56,685 |
57,738 |
58,187 |
|
Broker-Dealer Firms |
2,618 |
2,578 |
2,570 |
|
Broker-Dealer Agents |
296,366 |
300,492 |
309,899 |
|
Broker-Dealer Branch Offices |
16,740 |
16,395 |
15,977 |
The percentage of examinations completed by the Department has declined from 22.63% in 2019-20 to 17.76% in 2021-2022. The number of examinations resulting in referrals also has declined over the last three fiscal years, with 14 referrals in 2021-2022. However, in Broker-Dealer/Investment Adviser program also began issuing program-issued consent orders in 2021-2022.
Effective January 1, 2020, the class of mandated reporters of suspected financial abuse was expanded to include broker-dealers and investment advisers. 2019 Cal. Stats. ch. 272. See California Ponders Mandating That Brokers And Investment Advisers Report Financial Elder Abuse. The Department reports that over 1,500 such reports have been filed.
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