State regulators obtain more than $1 billion in investor restitution, fines

Money returned to investors hits highest level — $558 million — since 2014, NASAA reports

Sep 10, 2019 @ 1:14 pm

By Mark Schoeff Jr.

State securities regulators obtained more than $1 billion in investor restitution and fines last year, marking the highest amount of total relief achieved through enforcement actions in five years.

Regulators returned more than $558 million to investors — the most since 2014 — and levied $490 million in fines, for total relief of $1.048 billion, according to a report released by the North American Securities Administrators Association Tuesday at its annual conference in Austin, Texas.

The fine amount marks the second highest total in five years, following the $682 million imposed in 2016. State regulators oversee investment advisers who have less than $100 million in assets under management.

State regulators opened 5,320 cases in 2018 and took 2,067 enforcement actions, according to NASAA. They obtained a total of 1,753 years in criminal relief – 1,048 in incarceration years and 705 in probation years.

In addition, state regulators denied, revoked or suspended 1,032 licenses, while 4,511 licenses were withdrawn. Both numbers are the highest since 2014.

"The enforcement report really shows the great work that state securities regulators do every year," Christopher Gerold, bureau chief of the New Jersey Securities Bureau, said in an interview. "It's the one thing we can hold up and say, 'This is what we're doing.'"

Mr. Gerold was set to be inaugurated as the new NASAA president Tuesday afternoon.

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The report highlights enfocement actions targeting senior financial abuse. Last year, state regulators opened 365 investigations and took 141 enforcement actions involving 785 senior investors.

Legislation or rules based on the NASAA model rule on senior protection have been enacted in 23 jurisdictions, including four this year — Arizona, Maine, New Hampshire and Virginia.

The enforcement report provides examples of cases. One of the elder abuse incidents involved an investment adviser who reported a suspicious solicitation of a senior investor by an oil-and-gas company to the Alabama Securities Commission and Adult Protective Services. A hold was put on the investor's account that prevented a $200,000 transfer to the purported operation.


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