U.S. state regulators withdrew more investment advisory licenses in 2012
Oct 31 (Reuters) - U.S. state securities regulators withdrew the licenses of 3,564 investment advisory firms and stockbrokers in 2012, a 27 percent increase over 2011, a survey showed on Thursday.
However, the survey of 49 state regulators released by the North American Securities Administrators Association showed that funds returned to investors fell to $696 million from $2.2 billion a year earlier. (http://r.reuters.com/wuz34v)
The increase in license cancellations was partly due to completion of the transfer of oversight of 2,100 mid-sized investment advisers to state regulators from the Securities and Exchange Commission under the 2010 Dodd-Frank Act.
"Closer scrutiny of licensing applications has resulted in a noticeable increase in the number of licensing withdrawals in the past year," Andrea Seidt, NASAA president and Ohio Securities Commissioner, said in a statement.
The NASAA is an advocacy group for U.S. state and Canadian provincial securities regulators.
U.S. state securities regulators conducted 5,865 investigations in 2012, leading to 2,496 criminal, administrative and civil enforcement actions. Enforcement actions fell from 2,602 in 2011, the NASAA said.
As in the past few years, most of the actions last year involved unlicensed salespeople selling unregistered securities. The most common unregistered products involved in fraud were private placements, also known as Reg D offerings.
Private placements of securities can provide a way for small companies to raise capital, and do not have to be registered with regulators. They are supposed to be sold only to investors who meet certain income and net worth standards.
(Reporting by Aman Shah in Bangalore; Editing by Don Sebastian)