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Prison Time for Securities Lawbreakers Jumps 33%: NASAA

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Prison time for securities law violators increased 33% in 2013 from the previous year, with enforcement actions by state securities regulators resulting in 1,816 years of jail time for criminal defendants, according to the North American Securities Administrators Association.

According to NASAA’s annual enforcement survey, the prison sentences of criminal defendants in cases stemming from enforcement actions by state securities regulators jumped 455 years over the same period in 2012.

In 2013, state securities regulators conducted 4,882 investigations, which led to 2,184 enforcement actions, William Beatty, NASAA president and director of the Washington Securities Division, said in a statement.

The average sentence for criminal defendants in cases stemming from state securities enforcement actions increased by more than 53% to 5.5 years, according to NASAA’s enforcement survey. The full survey results will be released at the end of October.

In addition, the survey found that criminal defendants were ordered to serve 679 years of probation, up 96% from the previous reporting period.

NASAA statistics show that in 2013 the majority of investment fraud cases reported by state securities regulators continued to involve unregistered individuals or firms. States reported 810 actions (44%) involving unregistered firms or individuals; 576 actions (31%) involving registered broker-dealer firms and agents; 350 actions (19%) involving registered investment advisor firms or their representatives; and 54 actions (6%) involving insurance firms or agents.

“State securities regulators continue to serve as a strong line of defense to protect the public against investor fraud,” Beatty said in the statement. “The increase in jail time reflects the increasing complexity and heinousness of the crimes state securities regulators investigate and the criminals they help bring to justice.”

State enforcement actions also resulted in $616 million returned to investors and $72 million in fines or penalties, NASAA’s statistics show.

Beatty noted the important role state securities regulators play in weeding out of bad actors. In 2013, for example, the licenses of 3,438 broker-dealers, investment advisors and their representatives were either withdrawn denied, revoked, suspended or conditioned by state securities regulators.

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