The North American Securities Administrators Association (NASAA) reported on Tuesday that for the first time since it has collected enforcement data, more registered members of the securities industry than nonregistered members were named in enforcement actions.
In its 2016 Enforcement Report on 2015 Data, NASAA says state regulators brought enforcement actions against 812 registered industry members, compared to 791 involving unregistered personnel in 2015.
Laura Posner, NASAA enforcement section chairwoman, and chief of the New Jersey Bureau of Securities, suggests the increase in enforcement against the regulated industry stems from enhanced regulatory scrutiny. She notes the actions included cases involving unsuitable sales, dishonest or unethical practices, unauthorized trading and fraud.
“Given the large number of suitability and dishonest or unethical claims brought by state regulators in 2015, it is particularly critical that broker-dealers put in place sufficient safeguards to ensure such practices do not continue,” she adds.
State regulators conducted almost 4,500 investigations in 2015 and took 2,074 enforcement actions, according to the report. These actions resulted in more than US$538 million in restitution orders, US$230 million in fines, and 1,282 years of “criminal relief” being ordered, including incarceration, probation and deferred prosecution.
Additionally, a total of 2,990 securities licenses were withdrawn in 2015 as a result of action by state authorities, and 738 licenses were either denied, revoked, suspended or had conditions imposed.
“The vigorous, fair and effective enforcement of state securities laws through formal administrative, civil and criminal actions is a critical priority for NASAA members,” says Mike Rothman, NASAA president and Minnesota Commerce Commissioner, in a news release.
The NASAA report also highlights four enforcement priorities for state regulators: Ponzi schemes; internet fraud; gatekeeper fraud; and seniors fraud.