Aggressive Enforcement By State Securities Regulators Brings Criminals to Justice

WASHINGTON, D.C. (September 29, 2014) – The North American Securities Administrators Association (NASAA) today reported a significant increase in the amount of time securities law violators were sentenced behind bars in 2013 as a result of enforcement actions initiated by state securities regulators.

According to NASAA’s annual enforcement survey, the prison sentences of criminal defendants in cases stemming from enforcement actions by state securities regulators increased 33 percent, or an additional 455 years over the same period the year before.

In 2013, state securities regulators conducted 4,882 investigations, which led to 2,184 enforcement actions. These actions resulted in 1,816 years of jail time for criminal defendants, said William Beatty, NASAA president and director of the Washington Securities Division.

The average sentence for criminal defendants in cases stemming from state securities enforcement actions increased by more than 53 percent to 5.5 years. In additional criminal defendants were ordered to serve 679 years of probation, up 96 percent from the previous reporting period.

“State securities regulators continue to serve as a strong line of defense to protect the public against investor fraud,” Beatty said. “The increase in jail time reflects the increasing complexity and heinousness of the crimes state securities regulators investigate and the criminals they help bring to justice.”

State enforcement actions also resulted in $616 million returned to investors and $72 million in fines or penalties, NASAA’s statistics show.

Beatty noted that one of the key investor protection roles served by state securities regulators is to weed out bad actors before they have a chance to conduct business with unsuspecting investors. In 2013, for example, the licenses of 3,438 broker-dealers, investment advisers and their representatives were either withdrawn denied, revoked, suspended or conditioned by state securities regulators.

“Screening bad actors on the front end as a preventative measure is an often overlooked but vitally important way state securities regulators protect investors before their money can be lost,” Beatty said.

NASAA statistics show that in 2013 the majority of investment fraud cases reported by state securities regulators continued to involve unregistered individuals or firms. States reported 810 actions (44 percent) involving unregistered firms or individuals; 576 actions (31 percent) involving registered broker-dealer firms and agents; 350 actions (19 percent) involving registered investment adviser firms or their representatives; and 54 actions (6 percent) involving insurance firms or agents.

Beatty said additional details will be released when the full enforcement report on 2013 data is distributed later this fall.

For More Information:
Bob Webster | Director of Communications

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