In its 2010-2011 annual enforcement action report (released last month) the North American Securities Administrators Association (NASAA) reported a 51 percent increase in the number of enforcement actions filed by state securities regulators.
According to the report, regulators filed a total of 3,475 criminal, civil, and administrative enforcement actions in 2010, and ordered a combined $14.1 billion in restitution. Approximately 90 percent (more than $12 billion) of the restitution ordered was returned to investors, a 200 percent increase over 2009.
In addition to ordering firms to repay investors for unscrupulous conduct, regulators withdrew, revoked, denied, suspended, or conditioned 3,242 adviser and broker licenses last year. Regulators also ordered more than $171 million in fines and penalties, and conducted investigations that resulted in individual sentences totaling 1,134 years in prison.
The primary cause for action against advisers, brokers, and firms in 2010 was unregistered selling. Almost 900 enforcement actions were brought against individuals and firms selling unregistered securities. Another 800 actions were brought against unregistered individuals and firms. Nearly 1 in 3 actions involved elder abuse or fraud targeted at senior citizens.
In addition to highlighting last year’s actions, the report included a list of new resources available to investors who want to protect themselves from investment fraud. Among those listed were:
- An enhanced Investment Adviser Public Disclosure (IAPD) website, which enables individuals to electronically access information about particular financial professionals.
- NASAA’s Women in Transition program, designed to "empower women investors to take control of their financial futures." (Women investors interested in the program should contact their state securities regulator for information.)
- NASAA’s Live "Stock" Adventure. A new youth investor education program that helps middle school youth learn about the risks and rewards of investing through an interactive game. (Information about the game is available on NASAA’s website.)
To learn more, download the full 2010-2011 annual report here.