U.S. state securities regulators’ enforcement activity continued to decline in 2014, according to the latest data from the North American Securities Administrators Association (NASAA).
U.S. state regulators report that they received 11,340 complaints and conducted 4,853 investigations in 2014, resulting in more than 2,000 administrative, civil and criminal enforcement actions. The total number of enforcement actions, as reported in the survey, has declined in each year since 2010, which was in the immediate aftermath of the global financial crisis.
NASAA’s results of its latest annual survey of U.S. state regulators’ enforcement data does not include the members of the Canadian Securities Administrators (CSA), which publish their own annual enforcement reports.
Despite the decline in enforcement activity among U.S. state regulators, NASAA reports that these actions resulted in more than US$400 million in investor restitution orders and US$174 million in fines and penalties. In addition, criminal prosecutions that involved state regulators resulted in prison sentences of 1,629 years in total and 503 years of probation.
State securities regulators report that unregistered securities distributions and unregistered investment professionals remain the most common complaints from investors in their jurisdictions. The states also reported 442 investigations into dishonest or unethical practices by securities licensees, 334 investigations involving books and records violations, 157 investigations involving suitability and 99 investigations involving failure to supervise. Dozens of other investigations looked at cases of unauthorized trading and churning, the NASAA report notes.
In states that track victims by age, roughly one-quarter of enforcement actions during the survey period involved senior victims, the NASAA report says: “Unregistered securities, in the form of promissory notes, private offerings or investment contracts, continue to be the most common product involved in senior abuse cases. The data also indicate that affinity fraud and unregistered securities scams disproportionately affect seniors.”
In addition, the NASAA report points out that variable and equity-indexed annuities, life settlement products and free meal investment seminars also appear as continuing problems for senior investors.