The North American Securities Administrators Association (NASAA) has released its 2018 Enforcement Report (the Report) that says 2017 was the first year on record in which enforcement actions against registered investment advisors (RIAs) has outnumbered enforcements against broker-dealers and their representatives.
Increasing Enforcement Against RIAs: By the Numbers
However, the numbers in 2017 took a significant turn, with 377 actions against RIAs, compared to 270 actions against broker-dealers.
Those numbers represent a 32-percent increase in actions against RIAs, compared to an eleven-percent decrease in cases against broker-dealers.
The significant increase in actions against RIAs is somewhat surprising, especially when we consider that RIAs have a long-standing reputation for being quite conservative in their approach to trading practices.
Enforcements Also Increase Against Unregistered Parties
In another development of note, the Report states 2017 saw 675 actions filed against unregistered individuals and firms.
This 24-percent increase is a significant development, reversing the trend of 2015-2016. During that period, a majority of cases were filed against registered investment entities.
Non-registered parties now make up a majority of enforcement cases.
2018 has seen a continuation of that surge of enforcement against unregistered traders; states currently have 515 investigations pending.
This represents almost 40 percent more actions compared to just 2 years prior.
With the increased state enforcement efforts to corral fraudulent activity involving the loosely regulated trading of cryptocurrencies, a sustained, high volume of investigations and enforcement actions against non-registered individuals is expected.
Avoiding Compliance Enforcement: Jacko Law Group Can Help
The first line of defense against enforcement for any individual or firm is, of course, knowledge of applicable securities laws and regulations, and the authority of the Securities and Exchange Commission (SEC) to enforce such laws. RIAs and broker-dealers then must develop effective policies and procedures to ensure compliance with such rules.
While keeping up to date and in a state of constant compliance can be a tricky affair, being caught "unaware" is not a viable defense in case of examination. Jacko Law Group, PC., is here to help. Should you need clarification on new SEC policies affecting you as an RIA or broker-dealer, or if your firm needs assistance in the development or implementation of compliance policies, our attorneys would be happy to apply our years of experience to your unique situation - contact us here.
Add a comment
- Navigating a Successful Merger or Acquisition
- Remaining Vigilant Against Investment Fraud During the COVID-19 Pandemic
- Starting a New Business? Don’t Overlook These Three Essential Considerations
- Starting Out: Mergers & Acquisitions (Part 2)
- Final California Consumer Privacy Act Rules Approved by OAL
- Integral Factors for Your Firm's Mock SEC Examination
- Starting Out: Mergers & Acquisitions (Part 1)
- SEC Charges San Antonio CEO with Defrauding Investors Including First-Responders
- Considerations for Your Next Business Transition
- Three Things You Need to Know When Forming an RIA
- Investment Advisers
- Transition Services
- Due Diligence
- Securities and Exchange Commission (SEC)
- California Consumer Privacy Act (CCPA)
- Aging Clients
- Policies and Procedures
- Virtual Currency
- Advisers Act
- Dodd-Frank Act
- Broker Protocol
- Office of Compliance Inspections and Examinations (OCIE)
- Ponzi Scheme
- Securities Law
- Form U5
- Private Equity
- Private Funds
- Regulation Best Interest
- Hedge Funds
- Regulatory Examinations
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Social Media Marketing
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Wells Fargo