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Actions against BD agents, unlicensed individuals jumped in ’13: NASAA

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Enforcement actions brought by state securities regulators against broker-dealer agents and unlicensed individuals or firms surged in 2013, according to the North American Securities Administrators Association (NASAA)

Actions against broker-dealer agents jumped 89 percent in 2013 to 357 actions from 189 in 2012, while state securities regulators also brought 810 actions against unlicensed individuals or firms in 2013, up 34 percent from 603 the year before, according to NASAA.  

In its 2014 Enforcement Report on 2013 Data, released Tuesday, NASAA states that enforcement actions against broker-dealer firms decreased 3 percent to 219 from 225 the year before, but enforcement actions against licensed investment advisor representatives jumped 11 percent to 176 from 158 in 2012.

The report, which includes responses from 51 individual jurisdictions throughout the United States, also reported 174 enforcement actions against investment advisor firms, a 4 percent drop from 181 in the prior year.

“While the majority of enforcement actions handled by state securities regulators involve unlicensed individuals, the primary source of criminal activity in the financial markets, we also serve an important investor protection role through our oversight of the licensed financial professionals investors entrust with their money,” said William Beatty, NASAA president and Washington securities director, in a statement.

Beatty said the increase in actions against broker sales agents follows the states’ “more intense focus” on switching midsize investment advisors to state registration as required under the Dodd-Frank Act from 2011 and 2012 as well as “increased investor awareness of the effectiveness of state securities regulators.” 

A total of 169 licenses of brokers or investment advisors were denied in 2013 due to state action, a 36 percent increase from 2012. In addition, 394 licenses were conditioned, or put under heightened supervision, a 48 percent increase over 2012.

Other key findings from the report include:

State securities regulators received 9,693 complaints from aggrieved investors and conducted 5,302 investigations in the 2013 reporting period;

Approximately 2,200 administrative, civil and criminal enforcement actions involving more than 3,000 respondents and defendants were reported by the states;

The states reported an increase in the sentences imposed in criminal actions resulting in 1,816 years of incarceration and 679 years of probation; and

States imposed more than $616 million in investor restitution orders and levied fines or penalties and collected costs in excess of $75 million.


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