State securities regulators took fewer enforcement actions but collected more fines and returned more money to investors last year, according to a new survey from their membership organization.
The North American Securities Administrators Association said in its annual enforcement report that regulators pursued 7,029 investigations — 5,537 new probes and 1,692 continuing ones — and conducted 1,661 enforcement actions in 2021. That compares to 5,501 investigations and 2,202 enforcement actions in 2020.
State enforcement resulted in $312 million in investor restitution last year, a slight increase from $306 million in 2020. The total amount of fines skyrocketed to $145 million in 2021 after hitting $42 million in 2020. State regulators obtained a total of 8,831 months — or approximately 735 years — of prison or probation for perpetrators last year compared to 919 years of criminal relief in 2020.
The report also touted state regulators’ efforts to prevent fraud by keeping potential bad actors out of the industry. They withdrew more than 4,800 individual license or registration applications In 2021, a 33% increase from approximately 3,600 withdrawals in 2020.
The statistics for NASAA’s 2022 enforcement report represent results from 2021 and are based on survey responses from 48 of the organization’s U.S. member jurisdictions.
“This year’s enforcement report demonstrates that NASAA members continue to investigate complaints and pursue wrongdoers using all the tools at their disposal to address misconduct,” Andrew Hartnett, NASAA president and Iowa Insurance Division deputy administrator for securities, said in a statement.
The number of enforcement actions declined because of courts being closed and traditional investigative techniques, such as in-person depositions, being curbed due to the coronavirus pandemic, state regulators said at their annual conference in Nashville on Tuesday.
State regulators were able to overcome some of those difficulties by using technology to conduct enforcement business. The increase in restitution and fines was noteworthy under the circumstances, said Joe Rotunda, director of enforcement for the Texas State Securities Board.
“That is absolutely impressive in a time when we were very limited in what we could do,” Rotunda said during a presentation in Nashville. “I’ve been a regulator for 17 years. I’ve never seen enforcement programs work the way they have over the last 12 [and] 18 months — very successful.”
The products and schemes that drew the most enforcement actions were promissory note (161), online and social media (106), digital assets (90), stocks and equities (89) and Ponzi schemes (63).
“Amid the rapidly changing investing and savings marketplace, investors are facing increasing challenges in protecting their assets from fraud and abuse,” Joseph Borg, director of the Alabama Securities Commission and chair of NASAA’s enforcement section, said in a statement.
The top current investor threats involve cryptocurrency digital assets, promissory notes and debt instruments, and Internet and social media scams, Rotunda said.
Crypto scams are becoming more dangerous because crypto investing has caught the imagination of the public.
“Once it enters the mainstream, bad actors take notice,” Rotunda said. “They try to capitalize. They use that for their investment schemes.”
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
