Unlicensed Individuals, Firms Continue as Greatest Source of State Enforcement Actions

• Download: 2014 Enforcement Report on 2013 Data

WASHINGTON, D.C. (November 4, 2014) – The North American Securities Administrators Association (NASAA) today reported a significant rise in the number of formal enforcement actions initiated by state securities regulators in 2013 against licensed broker-dealer sales agents, as well as unlicensed individuals and firms.

NASAA’s 2014 Enforcement Report on 2013 Data includes responses from 51 individual jurisdictions throughout the United States and provides the number of complaints received; investigations and actions states have conducted or initiated; information on penalties and restitution resulting from enforcement actions; years of prison sentenced; types of actions brought, the most common products or practices at the core of these actions and the most common type of actors involved in state enforcement actions.

According to the report, the leading actors in enforcement actions brought by state securities regulators continued to be unlicensed individuals or firms. In 2013, states reported 810 actions against unlicensed individuals or firms, up 34 percent from 603 the year before.

Among licensed financial professionals, enforcement actions against broker-dealer agents increased 89 percent to 357 from 189 in 2012. Enforcement actions against broker-dealer firms decreased 3 percent to 219 from 225 the year before.

Enforcement actions against licensed investment adviser representatives increased 11 percent to 176 from 158 in 2012. States also reported 174 enforcement actions against investment adviser firms, down 4 percent 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.

Beatty said the increase in actions against broker sales agents follows the states’ more intense focus on switching mid-sized investment advisers in the two previous years and increased investor awareness of the effectiveness of state securities regulators, the closest regulators to the public.

Beatty said states also reported an increase in the denials and conditioning of licenses reflecting the regulators’ continuing push to keep unqualified individuals out of the industry or known problem applicants under heightened supervision. A total of 169 licenses of brokers or investment advisers were denied in 2013 due to state action, a 36 percent increase in denials from 2012. In addition 394 licenses were conditioned, a 48 percent increase over 2012.

For More Information:
Bob Webster | Director of Communications
202-737-0900