Are You Paying Attention?

As the financial regulatory landscape continues to evolve, it's crucial for RIA firms and broker-dealers to stay informed about the increasing enforcement actions by both state and federal authorities.

The 2023 report from the North American Securities Administrators Association (NASAA) sheds light on the record numbers of enforcement actions taken by state securities regulators in recent years, highlighting the growing scrutiny faced by the industry.

With state regulators collecting nearly $1 billion from enforcement actions, it's clear that the enforcement environment is becoming more aggressive. From fines and penalties to prison sentences, regulators are cracking down on violations of securities laws across the board. These enforcement actions cover a wide range of issues, including books and records, supervision, and cybersecurity, underscoring the importance of robust compliance programs for firms.

One of the notable trends is the increase in enforcement actions related to digital assets and cryptocurrencies, which have become a major focus for regulators. Additionally, social media and internet scams are on the rise, particularly those targeting older investors. With artificial intelligence emerging as a significant concern, regulators are adapting to new challenges posed by evolving technologies.

For RIA firms and broker-dealers, the implications of these enforcement actions are significant. Failing to comply with regulations can result in severe consequences, including license revocations, industry bans, and substantial fines. Moreover, the reputational damage caused by enforcement actions can have long-lasting effects on firms and their ability to attract clients.

The rising tide of state and SEC enforcement actions underscores the importance of proactive compliance efforts for RIA firms and broker-dealers. By staying informed, investing in compliance, and prioritizing client-centric practices, firms can navigate the evolving regulatory landscape and safeguard their reputation and future success. If this sound like a lot of work to undertake as a firm owner… it is. That’s why at My RIA Lawyer we have dedicated Outsourced Compliance Department services that are designed to grow with your firm. Contact us today to find out how we can help keep you on the right side of the regulators.