The North American Securities Administrators Association found a variety of compliance deficiencies in a regulatory sweep conducted earlier this year.

At its annual conference in Minneapolis today, NASAA reported that a sweep of investment advisers by state and provincial examiners in 33 NASAA jurisdictions in the U.S. and Canada revealed a significant number of problem areas. Of 367 examinations of investment advisers that were conducted between March and May 2005, 323 revealed at least one deficiency, according to NASAA investment adviser section chair and district of Columbia Securities Bureau director Theodore Miles.

Overall, the examinations found 2,068 deficiencies in 18 compliance areas, compared with 588 deficiencies in 15 compliance areas in the previous sweep, conducted in 2003. The greatest number of deficiencies identified in the 2005 sweep involved registration, followed by contracts, supervision, privacy, and books and records.

Miles said the top 10 deficiencies remained the same between the two sweeps, although the order changed. Most notably, supervision deficiencies ranked 10th in 2003 and third in 2005. The exams conducted in 2005 also found a higher percentage of advisers with deficiencies in each of the top 10 categories than in 2003.

Based on the sweep results, NASAA recommended a series of 10 “Best Practices” to help advisers develop compliance practices and procedures. Outgoing NASAA president Franklin Widmann, “These recommended best practices are designed to promote the better understanding of compliance challenges among regulators and advisers. With this information, advisers can develop compliance programs to reduce the potential for regulatory violations and, in turn, build investor confidence in their activities.”