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The latest data from the NASAA 2023 Enforcement Report reinforces the critical role of securities regulators in protecting investors from fraud and financial abuse.

2023 NASAA Enforcement Report Highlights
(Based on 2022 data)

The North American Securities Administrators Association (NASAA) is an international association of state, provincial, and territorial securities regulators in the United States, Canada, and Mexico. These regulators continue to serve as the first, and often the last, line of defense against white-collar crime and financial misconduct targeting the investing public. As we move out of the pandemic, we continue to be astonished at the creativity and ingenuity of con artists. While the pandemic provided a host of new headlines and fodder for fraudsters, the schemes that emerged were fundamentally no different from the devices of the past. They are simply adorned with new clothes.

This year’s report reflects the responses of securities regulators in 48 U.S. states and territories covering 2022 fiscal and calendar years. In 2022, they investigated 8,538 cases and initiated 1,163 enforcement actions, including 136 criminal actions, 59 civil actions, and 825 administrative actions. Members also secured $702 million in restitution and more than $223 million in fines, as well as approximately 5,337 months in prison sentences and 9,520 months of supervised release.

Cumulatively, this data highlights the continued vigilance of NASAA’s members as the local “cops on the beat.” Moreover, the types of activities for which NASAA members took action demonstrate that in a post-pandemic world, the principles the United States Supreme Court enunciated in SEC v. W.J. Howey Co. remain relevant. Indeed, Howey serves as a touchstone for the myriad of investment schemes which are often constructed around relationships and built upon trust. While an investment contract can be “negotiated” in a variety of circumstances, the essence of this “security” is an agreement, transaction, or scheme, with a view toward an investment, entered into by investors that are relying on the efforts of others to put their money to work. Howey withstands the test of time and continues to provide an adaptive framework for regulators to evaluate the ever-evolving investment landscape and allows for oversight of the financial pursuits that form the basis of prosperity within our jurisdictions. Despite the altered appearance of many new frauds, existing regulatory tools remain effective to provide the investor protections critical to maintaining the integrity of our capital markets.

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