The North American Securities Administrators Association reported a 51% increase in the number of enforcement actions by state securities regulators in 2010, which led to a nearly 200% increase in the amount of money ordered returned to investors.
According to the NASAA report, state securities regulators conducted 7,063 investigations in 2010, which generated 3,475 enforcement actions (including criminal, administrative and civil actions), up from 2,294 enforcement actions in the previous year. Nearly 1,000 of these actions involved financial abuse of seniors.
Additionally, state-initiated enforcement actions resulted in US$14.1 billion ordered returned to investors, with an actual reportable return of more than $12 billion, or 90% of ordered restitution, in the same year. Most of the restitution is attributable to repurchases of auction rate securities.
In 2010, more than 3,242 licenses were withdrawn, denied, revoked, suspended or had conditions placed on them, due to state actions, which is down 5% from 3,406 the year before. States levied fines or penalties of US$171 million in 2010 and prison time resulting from state actions totaled 1,134 years.
The majority of the investment fraud cases reported by state securities regulators featured unregistered individuals selling unregistered securities, NASAA said. Nearly 900 reported actions involved unregistered securities, and almost 800 involved unregistered firms or individuals.
“State securities regulators are committed to investor protection through the strong enforcement of state securities laws. We are in the trenches every day working to protect Main Street investors,” said Jack Herstein, NASAA president and assistant director of the Nebraska Department of Banking & Finance Bureau of Securities.