State regulators again reported an increase in investigations of unregistered individuals, to no fewer than 700 in the 2018 survey year. This number has risen for three consecutive years, more than doubling from 335 in 2015.
“Given the ongoing state enforcement efforts against fraudulent activity involving cryptocurrencies, it would not be surprising to see a sustained high level of investigations and actions against unregistered individuals and firms in the coming years,” NASAA said in a statement.
The report also includes the first statistics documenting the effectiveness of state regulators in protecting protect seniors using NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation.
The model act mandates reporting to a state securities regulator and state adult protective services agency when an agent or representative has a reasonable belief that financial exploitation of an eligible adult has been attempted or has occurred.
“Senor investors remain a major target of fraudsters, and NASAA member jurisdictions remain focused on this threat,” the group said.
State regulators received 400 reports from broker-dealers and investment advisors and brought enforcement actions against schemes that targeted 758 senior victims in 2018, NASAA said.
Unregistered securities and traditional securities scams accounted for the majority of enforcements, but other schemes included internet romance plots, lottery and sweepstakes scams, Nigerian investment narratives and identity theft.
Of the 23 states with laws based on the NASAA model act, 14 reported receiving 426 reports from broker-dealers and investment advisers, resulting in 81 investigations, 57 delayed disbursements, and 32 enforcement actions in 2018.
To date, 23 jurisdictions have enacted rules or legislation based on the model act, including four in 2019.
“Many of the first states to enact the Model Act have seen a drastic increase in use of these statutes and the number of reports of potential financial exploitation from firms,” NASAA said. For example, the number of reports of potential senior exploitation increased 225% in Alabama in 2018 and are on track to be even higher in 2019.