NASAA’s enforcement actions and what they mean for your firm


Regulators are evolving their enforcement actions and regulations to reflect the modern financial landscape. The North American Securities Administrators Association (NASAA) is the latest regulator to reflect this with its focus on internet and social schemes in this year’s enforcement report.

NASAA’s enforcement actions against internet and social media schemes

Advancements in technology have removed many of the barriers that once made it difficult for fraudsters and other bad actors to contact victims. They no longer have to rely on print media, radio promotions and cold calls. Instead, they are capitalizing on the rapid growth in technology including expanded access to the internet and the proliferation of social media, and the responses to the latest enforcement survey reflect these recent changes in the market.

To put it plainly, there is an increasing use of the internet and social media to illegally market products, and in conjunction, there is increasing use of widespread interest in digital assets to harm the public. Here are some troubling figures from last year:

  • State and territorial regulators opened 127 investigations of suspect offerings marketed through the internet and social media.
  • State and territorial regulators filed 106 enforcement actions against promoters using the internet and social media to market scams.
  • In 2021, state and territorial regulators saw the number of enforcement actions increase from 22% in 2020 and 79% from 2019.

As the speed of technology innovation only increases, regulators continue to adapt their enforcement actions and regulations to ensure confidence in the market. The Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), the North American Securities Administrators Association (NASAA) and other regulatory bodies are actively leveraging technology to identify patterns and suspicious activity. Firms must keep pace, and compliance professionals need to ensure their firms are equipped to keep up with these changes.

What NASAA’s enforcement actions mean for your compliance program in 2022

The goal for compliance in most firms is to avoid scenarios that put the firm, its stakeholders, its clients or its employees at risk in any way. These best practices can help firms stay on top of a regulatory environment that changes rapidly:

1. Commit to training.

The cornerstone of a solid regulatory compliance program in any size firm is training for all employees, including those members of the compliance team who you might think are the most up to date. Effective training programs should be ongoing and updated as regulations change.

2. Keep lines of communication open.

Successful compliance officers know that it’s important to build and maintain the lines of communication with other business areas of the firm. To stay on top of changing regulations, it can also be beneficial to foster dialogues with other compliance professionals, both in your region and around the country. As a matter of fact, we have an opportunity for compliance professionals to meet with other members of the industry, ask questions and learn from their counterparts at our ComplyConnect Conference & Expo.

3. Implement a customized compliance technology solution.

Perhaps the most important step firms can take to manage their compliance risk in an ever-changing environment is to leverage technology. Compliance officers must be confident that their firms have sufficient controls in place. This should include processes and systems which are designed to lower the risk of unauthorized access to information.

Not only does a regulatory compliance solution help your firm’s compliance staff manage vast amounts of data, it also makes the act of complying with regulations simpler. Because when it’s easier for employees to do their jobs, they are more likely to comply.

If you choose the right compliance solution for your firm, one with a user-friendly interface and mobile capabilities, compliance tasks become interwoven into employees’ everyday job responsibilities. This, in turn, helps build a stronger culture of compliance in the firm.

Despite great strides in many organizations’ efforts to build and foster a culture of compliance, risk management and compliance professionals still face an uphill battle in many firms. The benefits of a strong culture mean increased adoption of policies and procedures and improved communications across business lines, not to mention decreased risk to the firm.

If the past decade is any indication, firms can expect the pace of changing regulatory requirements to remain steady or even increase. Firms that take a proactive approach to managing their compliance programs can expect to be well-prepared to weather those regulatory changes as they occur.

NRS works directly with clients to master compliance with confidence. Learn more about our solutions for broker-dealers, investment advisers and hedge fund managers.