The North American Securities Administrators Association ("NASAA") issued a report on state regulators enforcement actions in 2015.
NASAA reported that:
- state securities regulators conducted 4,487 investigations and brought 2,074 enforcement actions, which led to (i) the return of over $538 million in restitutions to investors, (ii) fines totaling $230 million, (iii) $18 million in costs recovered by securities regulators, and (iv) $11 million in required payments for investor education;
- most enforcement actions brought by state regulators were administrative or civil, but 253 were criminal in nature;
- 2,990 securities licenses were withdrawn as a result of state actions, and an additional 738 licenses either were denied, revoked, suspended or conditioned;
- the highest number of actions pertaining to a single kind of charge involved "books and records"; and
- a substantial number of actions involved the "failure to supervise."
The report provided highlights with a section devoted to examples of securities fraud, including: (i) Ponzi schemes, (ii) internet fraud, (iii) gatekeeper fraud, and (iv) senior fraud.
Commentary / Steven Lofchie
The report contains numerous charts and exhibits based on statistics from an incomplete data set - an upfront admission by the NASAA Enforcement Section Chair. So it is difficult to say how much of the report reflects actual trends or types of violations in the securities industry. As a result, the report comes across as a kind of an advertisement for NASAA and state securities regulators. If any single area of the report should attract firms' attention, it is probably "Senior Fraud" – particularly since the report follows yesterday's NASAA release on that very topic.
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