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2010 Saw 51 Percent Rise in Securities Fraud Enforcement Actions

The North American Securities Administrators Association (NASAA) released its annual report last month on enforcement actions to fight securities fraud. The report compares the data on securities fraud enforcement actions from 2010 to that of 2009. According to the report, the number of actions pursued in 2010 rose 51 percent, a major jump from 2009. In addition, the report notes a 10 percent increase of securities fraud violations, a 9 percent increase in unregistered securities violations and a 24 percent increase in unregistered individual violations.


Other reported statistics include:

  • 7,000 total investigations, 3,475 of which led to enforcement actions
  • Nearly 1,000 actions that involved fraud and abuse of senior citizens
  • $170 million in state-levied fines or penalties
  • $14 billion in restitution paid to investors
  • $31.2 million in state costs or expenses
  • 2,595 stockbroker licenses withdrawn
  • 647 stockbroker licenses denied, suspended, revoked or made conditional
  • 1,134 years of incarceration dealt out

Fraud and abuse of senior citizen cases involved promissory notes, investment contacts, private offerings, affinity fraud, variable annuities and “free lunch” investment seminar scams. Despite the rise in enforcement actions, the number of investigations fell slightly from 7,086 in 2009 to 7,063 in 2010. The amount of money collected in fines and penalties also fell from 2009 to 2010, but there was an increase in restitution paid to investors.

This report can only measure cases of securities fraud that were actually reported. However, the number of incidences is believed to be much higher, as many cases go unreported. According to the report, 2010’s most problematic products, in order of frequency, were Rule 506 offerings, real estate investments or interests, oil and gas interest, structured products, hedge funds or private equity funds, variable annuities, viaticals or life settlements, precious metal commodities, non-precious metal commodities and equity-indexed annuities.

The NASAA, organized in 1919, is a voluntary association, and of all the organizations devoted to investor protection, it is the oldest. All 50 states, Canada, Mexico, the U.S. Virgin Islands, the District of Columbia and Puerto Rico are represented in the NASAA’s securities administrators membership.

If you believe you have become a victim of stockbroker fraud in 2011, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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