Page 7 - 2013_2014 NASAA report

NASAA Member Activity | U.S.
NASAA Activity Report 13-14.indd
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Arkansas Securities Department
Te Department took the lead in bringing state government to rural areas of Arkansas with
a series of Protecting Arkansans events. Te eight sessions, conducted at diferent locations
within the state, brought representatives from various state agencies including the Securities
Department, Attorney General, Insurance Department, Department of Human Services,
and the University of Arkansas to meet, present, and answer questions. Topics included
investment and senior fraud, current scams, Medicare fraud, household fnances, and healthy
living. In addition, attendees had the ability to visit agencies in a trade show setting, with
access to printed materials and one-on-one conversations with departmental representatives.
California Department of Business Oversight
Te Department of Business Oversight provides protection to consumers and services to
businesses engaged in fnancial transactions. On July 1, 2013, the Department was formed by
the consolidation of the former Department of Corporations and the former Department of
Financial Institutions. California now has one centralized fnancial services regulator to ensure
efective enforcement of state fnancial laws intended to protect consumers. Te Department
licenses and regulates hundreds of thousands fnancial services, products and professionals,
including 3,012 broker-dealer frms with 276,199 agents, 3,678 state investment adviser
frms, and 50,575 investment adviser representatives. In January 2014 the Department began
assessing an annual renewal fee of $25 for broker-dealer agents and investment advisors
seeking to operate in California. In 2013 the Department issued 252 enforcement actions
against unscrupulous fnancial companies and individuals that violated state fnancial
laws. One of those actions was a multistate enforcement action against WCM 777 (dba
World Capital Market, Inc., WCM777, Inc., and WCM777 Limited), an entity that ran an
unlicensed investment scheme that took in more than $10 million, including investments from
at least 5,500 Californians.
Colorado Division of Securities
Two Denver area frefghters, a husband and wife, complained to the Division about
irregularities in their investment account with a brokerage frm. Tey invested most of their
life savings through a fnancial adviser, a former fre department colleague. Te Division
opened an investigation and learned the adviser neglected to inform his clients he had been
fred by his frm. Due to an internal error by the frm, the adviser was able to continue
accessing his clients accounts, most of which was invested in a mutual fund. Te adviser
periodically requested that the mutual fund positions be sold in four of his clients accounts
and surreptitiously intercepted overnight deliveries of the proceeds. Investigators determined
the adviser used the money to purchase a townhouse, a private plane, and to pay for living
expenses. Te Division fled a temporary restraining order freezing the advisers assets.
Division prosecutors fled a criminal case, charging the adviser with securities fraud and theft.
He was sentenced to 12 years in prison. Part of the Divisions investigation also examined
how the adviser was able to exploit the brokerage frms system to access accounts after his
termination. As part of the resolution of this inquiry, the brokerage frm reimbursed all of the
adviserss clients losses, about $700,000.
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