State securities regulators reported a five-year high in enforcement actions involving investment advisor firms.

In 2018, states reported that 17% of their actions involved investment advisor firms, more than any other category of registered individuals, according to the North American Securities Administrators Association (NASAA) annual enforcement report, released late yesterday.

That share has nearly doubled since 2014, when these firms represented only 9% of respondents, NASAA reported.

State regulators also reported a record $1 billion in monetary relief ordered and 1,753 years of criminal relief as a result of their enforcement actions. Bad actors charged by state regulators received 1,048 years of incarceration and 705 years of probation.

“This report shows that NASAA members are on the frontlines of investor protection,” said NASAA President Christopher Gerold, who is also chief of the New Jersey Bureau of Securities.

State securities regulators reported actions against 639 registered individuals and firms in the securities industry (broker-dealers and investment advisers), and 639 unregistered individuals and firms.

Overall, state securities regulators continued to take strong steps to prevent bad actors from operating within the licensed securities industry, and to limit the activity of licensees and registrants, the group said.

In 2018, NASAA’s U.S. members imposed licensing sanctions on nearly 1,000 respondents as the result of formal enforcement actions, according to the report.

In addition, more than 4,500 license/registration requests were withdrawn as a result of state action or attention. Many license/registration requests are withdrawn as a state is preparing to take action to deny, suspend or revoke a license/registration, NASAA said.

State regulators “stand ready to aggressively protect investors from fraud and police the integrity of our capital markets well into the 21st century,” Gerold said.

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