State sanctions against registered investment advisors were up slightly in 2013, while penalties against brokers surged 39 percent, the North American Securities Administrators Association said Monday.

Actions by state securities offices against registered advisor firms and their representatives totaled 350 last year versus 339 in 2012.

Broker-dealers and agents had actions against them by the states 576 times in 2013 compared with 414 in the 12 previous months.
As a result of the Dodd-Frank Act, 2013 was the first full year that state securities regulators had authority over advisory firms with $25 million to $100 million in assets under management.

The increase in the dollar limit upped the number of advisors overseen by state agencies by 2,100 to a total of 17,100.

The preliminary Nasaa annual report also showed that money returned to investors by its members from state securities law violators declined to $616 million from $694 million, while fines and penalties dropped to $72 million from $115 million.

Meanwhile, total enforcement actions by Nasaa members decreased for the third time in three years to 2,184 in 2013 compared with 2,496 in 2012.

The high water mark in recent years was 3,475 in 2010, a surge of nearly 50 percent from the previous years as actions against fraudsters involved in the financial crisis reached their peak.

Investigations by state securities declined for at least the fourth year in a row to 4,882 from 5,865 in 2012 and a four-year high of 6,565 in 2009.

Jail time for all offenders directly prosecuted by state securities agencies or as referrals to their attorneys general rose 60 percent to 1,816 years, with the average sentence up more than 53 percent to 5.5 years.

Unlike the Securities and Exchange Commission, many state securities agencies can bring criminal charges on their own.

In a press release, Nasaa President and Washington State Securities Division Director William Beatty said the rise in prison time was at least partially attributable to an increase in the “heinousness” of financial fraud state officials were seeing.

But when Nasaa spokesperson Bob Webster was asked to show that the crimes by the fraudsters were getting more severe, he could only cite two he said could be characterized as heinous.