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State Securities Regulators Report Significant Increases in Criminal Penalties

 The North American Securities Administrators Association (NASAA) reports that in 2017 the 51 state securities regulators brought cases resulting in 1,985 years of prison time and probation, a 47% increase over the prior year.  The state regulators also commenced 4,790 investigations in 2017, a 10% increase over the prior year, and initiated 2,105 enforcement actions, a nearly 6% increase.  State securities regulators continued their increased focus on registered investment advisers, taking 377 enforcement actions against RIAs as compared to 270 against BDs.  NASAA reports that cases against unregistered firms and individuals exceeded those against registered firms and individuals.   “Securities fraud is a constant, ongoing, ever-evolving threat to investors. But as this year’s enforcement survey demonstrates, NASAA members are well-prepared, well-organized, and uniquely qualified to continue to aggressively protect investors,” said NASAA’s Enforcement Chair.

OUR TAKE: Unlike the SEC, the state securities regulators have the power to pursue criminal penalties including prison time.  Regardless of what happens at the federal level, the states appear ready to flex their enforcement muscles.