NASAA: Enforcement Actions Skyrocket for RIAs in 2017
The North American Securities Administrators Association (NASAA), an organization that represents state, provincial, and territorial regulators in the U.S., Canada and Mexico, just released its “NASAA 2018 Enforcement Report.”
The North American Securities Administrators Association (NASAA), an organization that represents state, provincial, and territorial regulators in the U.S., Canada and Mexico, has just released its NASAA 2018 Enforcement Report, revealing 2017 as the first year that investment adviser firms and representatives eclipsed broker-dealer firms and agents in state enforcement actions.
The report also noted a 24 percent increase in enforcement action against 675 unregistered individuals and firms. There was also a 9 percent increase in enforcement action against 647 registered individuals and firms.
These results marked a complete reversal of a two-year trend where the majority of those who faced enforcement actions involved registered individuals and firms in the securities industry (broker-dealers and investment advisors).
Yet the evidence of these bad actors’ activities began to emerge in 2016, when NASAA U.S. members reported that the number of investment advisor firms and representatives under investigation had increased by nearly a third, year-over-year.
In fact, 2017 was the first year that investment advisor firms and representatives significantly eclipsed broker-dealer firms and agents in state enforcement actions. 377 investment adviser firms and representatives were named in enforcement actions, a 32 percent increase. Conversely, 270 broker-dealers and their agents were named in enforcement actions, representing an 11-percent decline.
NASAA U.S. members revoked, barred or suspended the licenses/registrations of more than 300 individuals and firms, and denied or conditioned the licenses/registrations of more than 575 others in 2017.
Plus, nearly 3,600 license/registration requests were withdrawn as a result of state action or attention, which represented the most action in the last four years. It is likely that more action will be taken soon to complete the investigations of 515 unregistered individuals initiated last year. The enforcement actions taken by NASAA U.S. members may also involve fines, penalties, restitution, incarceration and probation.
