NASAA (February 27, 2024) - NASAA Releases 2023 Enforcement Report
State Securities Regulators See Rising Risks of Social Media Scams and Digital Asset Fraud
DOWNLOAD: NASAA 2023 Enforcement Report on 2022 Data
WASHINGTON, D.C. (February 27, 2024) – The North American Securities Administrators Association (NASAA) today released its 2023 Enforcement Report, which shows state securities regulators were responsible for nearly $1 billion in monetary relief ordered as a result of state enforcement actions in 2022.
In 2022, state securities regulators investigated 8,538 cases and initiated 1,163 enforcement actions, including 136 criminal actions, 59 civil actions, and 825 administrative actions. State regulators also secured $702 million in restitution and more than $223 million in fines, as well as approximately 5,337 months in prison sentences and 9,520 months of supervised release. The 8,538 cases represent a sharp increase from the 7,029 cases reported in 2021. The data for the report is collected via a survey of NASAA members. The full report is available here.
“This data shows that state securities regulators remain vigilant when it comes to protecting investors,” said Claire McHenry, NASAA President and Deputy Director of the Nebraska Department of Banking and Finance. “It is critically important that investors feel safe when they are investing their hard-earned money and have trust in the public markets. Our members are on the front lines of this fight, and we will continue to go after bad actors and scammers intent on doing harm to Main Street investors.”
The report demonstrates that investigations and enforcement actions taken by state securities regulators are increasingly tied to developments in technology, including digital assets and products marketed through the internet and social media. Report data reveals a significant rise in the number of investigations involving social media and internet scams in 2022, with 172 cases opened in 2022 compared to 127 cases in 2021. State securities regulators also reported filing 125 enforcement actions involving investments tied to digital assets, an increase of almost 30% from the previous year.
“Through all the recent changes fraudsters are using to try and dupe investors, this report underscores the power of existing regulatory tools and securities regulators’ commitment to work together to use every tool in our toolkit to halt ongoing fraudulent schemes and ensure justice for victims,” say NASAA Enforcement Section Committee Co-Chairs Brett Olin, Montana Deputy Securities Commissioner, and Amanda Senn, Alabama Securities Director. “State securities regulators remain the local ‘cops on the beat’ in this ever-evolving investment landscape.”
State securities regulators work to ensure compliance within the licensed securities industry. Within the licensed securities industry, state securities regulators reported actions against 271 investment advisers and investment adviser representatives and 98 broker-dealers and agents.
States continue to serve a vital gatekeeper function for U.S. capital markets by screening out bad actors before they have a chance to conduct business with unsuspecting investors. In 2022, 5,956 individuals and 291 firms withdrew their applications for licensure due to state investigations or forthcoming actions to deny, suspend or revoke their applications. For the 2022 reporting year, state securities regulators revoked 57 licenses, barred 63 individuals and 31 firms from the industry, and suspended the licenses of an additional 42 registrants. U.S. NASAA members also denied slightly more than 600 license applications—the highest number of such actions in recent years.
The report also highlights state securities regulators’ prioritization of protecting older investors. In 2022, they opened 680 investigations and filed 133 enforcement actions involving at least one older investor. These cases have historically involved traditional products that provide certainty, such as promissory notes and other investments perceived as being isolated from changes in the economy, but in 2022, the top issues in investigations involving older investors were social media and internet scams and digital assets.