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NASAA Unveils Enforcement Statistics

by Glen Shapiro,, New York

14 December 2006

According to the North American Securities Administrators Association (NASAA), state securities regulators on Tuesday reported significant increases in the number of enforcement actions, money ordered returned to investors, and years of incarceration for securities law violations during the most recent reporting period.

“These statistics reflect the ongoing vigilance of state securities regulators to protect Main Street investors from fraud,” announced Joseph P. Borg, Director of the Alabama Securities Commission and President of the North American Securities Administrators Association (NASAA), the oldest international organization devoted to investor protection.

NASAA reported a 23% increase in enforcement actions (including administrative, civil and criminal) to 3,635 during the 2004-2005 reporting period, up from 2,964 during the 2002-2003 reporting period.

One-quarter (26%) of all enforcement actions involved the financial exploitation of seniors, Borg said, noting that 34% of all successfully concluded enforcement actions involved either variable or equity-index annuities.

“Investment fraud targeting seniors is an ongoing concern and that’s why we are pleased that federal regulators and others have joined us in our efforts to fight senior investment fraud through targeted and aggressive enforcement,” he explained.

Money ordered returned to investors (including restitution, rescission, and disgorgement) increased 38% to $911 million from $660 million during the previous period. Years of incarceration as a result of securities law convictions rose 30 percent to a cumulative 935 years, compared to 718 years in the previous reporting period.

NASAA also reported monetary fines and penalties ordered during the 2004/2005 reporting period totaled $61 million. During the 2002/2003 reporting period, penalties and fines totaled $822 million, which included amounts ordered stemming from settlements related to several large Wall Street investigations.

“While our emphasis has always been on enforcing the securities laws and getting money back to investors, the industry-created scandals of recent years led to larger than usual totals for fines and penalties during the previous reporting period,” Borg concluded.

“We hope that the lower amount of penalties and fines in the current reporting period reflects that Wall Street now understands that business must be done for the benefit of investors, not to their detriment and that the lessons of the past will not be forgotten in the new economic climate.”

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