State regulators flexed enforcement muscle in 2019

State securities regulators opened more investigations, took more enforcement actions and returned more money to harmed investors in 2019 than they did the year prior, their umbrella organization reported Wednesday.

In its annual enforcement report, the North American Securities Administrators Association said state regulators last year launched 6,525 investigations, up from 5,320 in 2018, engaged in 2,755 total enforcement actions, up from 2,067 last year, and paid $634 million to victims of securities fraud, $76 million more than in 2018.

The number of administrative enforcement actions was 2,275, an increase of 39% from the five-year average of 1,631.  

“These administrative actions are critical components of investor protection, and data shows states are increasingly using their administrative authority to effectively police the market,” Joe Borg, director of the Alabama Securities Commission and NASAA enforcement section chair, wrote in the report introduction.  

State regulators produced 957 years in criminal relief — 653 years of incarceration and 304 years of probation. They levied $80 million in fines last year. The fine amounts have fluctuated widely, from a high of $682 million in 2016 to a low of $79 million in 2017.

“State securities regulators are on the front lines in the fight against financial exploitation and investment fraud,” Lisa Hopkins, NASSA president and West Virginia senior deputy securities commissioner, said in a statement. “This report reflects the responsive and effective actions taken by NASAA members against a wide variety of actors who seek to do harm to Main Street investors.”

State regulators have made protecting senior investors a high priority. A NASAA model rule on senior financial exploitation has been adopted by 28 jurisdictions. Last year, state regulators received 607 complaints about senior financial abuse, opened 486 investigations and took 208 enforcement actions.

The enforcement report is based on input from 51 jurisdictions throughout the United States.

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