Just released exam data of advisors who switched from federal to state oversight earlier this year shows similarities in the type or frequency of deficiencies between those advisors previously registered with the states, according to the North American Securities Administrators Association.
The little difference in the types and frequency of deficiencies “demonstrates that states and NASAA worked hard to inform and educate switching advisers [about states’ examination procedures] before and during the switch,” said Heath Abshure, NASAA president and Arkansas Securities Commissioner, in a statement.
NASAA’s 2013 Examination Report, released Monday at NASAA’s annual meeting in Salt Lake City, included exam data on 1,130 advisors reported voluntarily between January and June 2013 by 44 state and provincial securities examiners. The 2013 exams uncovered 6,482 deficiencies in 20 compliance areas, compared to 3,543 deficiencies in 13 compliance areas identified in a similar 2011 report of 825 investment advisors.
Under the Dodd-Frank Act, about 2,100 mid-sized investment advisors with AUM between $30 million and $100 million switched from federal to state oversight earlier this year.
The top five deficiencies for advisors with less than $30 million in assets under management involved books and records, registration, contracts, privacy and brochure delivery.