Securities Regulators Say Enforcement Actions Are On The Rise

Enforcement actions against securities law violators have been on the rise, according to state securities regulators.  The North American Securities Administrators Association (NASAA) says that the number of enforcement actions increased significantly in 2004-2005 – as did the amount of money recovered for investors.  NASAA also reports that longer prison terms were meted out to convicted securities law violators during that period.  NASAA consists of regulators from the 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and Canada,

The statistics suggest that enforcement efforts have been headed in the right direction.  NASAA reported that 3,635 civil and criminal enforcement actions were filed during the 2004-2005 reporting period – a 23% increase over the previous year.  A similar spike could be seen in financial recoveries in the 2004-2005 time frame.  $911 million was ordered returned to investors – up38% from one year earlier.  Prison terms rose 30%, to a cumulative 935 years.

Not all of the numbers were up.  Regulators assessed fines and monetary penalties totaling $61 million, a precipitous drop from $822 million charged in 2002-2003.  NASAA indicates that the discrepancy can be attributed to significant penalties paid by major Wall Street brokerage firms during the earlier period, much of which resulted from universal settlement of investigations into phony research reports.

NASAA also confirmed that a large proportion of stock scams target senior citizens.  Joseph Borg, President of NASAA and Director of the Alabama Securities Commission, noted that 26% of all enforcement actions involve financial exploitation of seniors, and insisted that regulators will continue to focus their efforts on fighting senior investment fraud.

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