As the industry keeps changing, it's important to know a company's "pedigree."
The North American Securities Administrators Association (NASAA) is a voluntary association of state, provincial, and territorial securities administrators in the United States, Canada, and Mexico that aims to provide grassroots protection for consumers who purchase securities or investment advice. Members benefit firm information sharing and participation in multistate enforcement actions. The NASAA's website, at http://wwwjiasaa.org, presents numerous resources for securities industries and professionals, as well as tools for small business capital formation, investor education, and fraud prevention.
The homepage is organized around six main areas: investor education, issues and advocacy, regulatory and legal activity, industry resources, newsroom, and "contact your regulator." It highlights recent regulatory issues and the latest news and investor alerts.
The NASAA offers useful materials for regulatory and investment professionals. The investment advisor guide contains an overview of the investment advisor industry, including registration, required filings, licensing period, recordkeeping, and fiduciary duties. The directory of securities laws and regulations provides links to the websites of NASAA member organizations in the United States, Canada, and related territories.
Corporation finance resources include two NASAA programs developed to aid companies in streamlining the process of registering and issuing securities. The Small Company Offering Registration (SCOR) program's webpage provides a detailed 38page Microsoft Word template for Form U7 7 Company Offering Registration Form). Coordinated Review (CR) programs are available for issuers pursuing multistate registration; these are housed on a stand-alone website, http://www.coordinatedreview.org.
The site's issues and advocacy section houses the Dodd-Frank Information Center, which includes an overview of the DoddFrank Wall Street Reform and Consumer Protection Act of 2010. A General Accountability Office (GAO) study on financial planner regulation discusses the various federal and state laws that apply to financial planners; it points out inconsistencies and inefficiencies, but concludes that an additional layer of regulation is not recommended.
Regulatory and Legal Activity
The resources in this section include the NASAA's policy statements and enforcement statistics. An example of policy resources is a statement on corporate securities definitions tirât covers terms used in the organization's various policies, such as "adjusted net earnings," "equity securities," and "independent director." The risk disclosure guidelines address the presentation of information on risk factors. The NASAA's 2013 enforcement report presents the results of an annual survey of its members that addresses trends in securities fraud, investor protection, and regulation. The study, based on data from 2012, indicated that investors filed more than 10.000 complaints, resulting in almost 6.000 investigations and $700 million in investor restitution orders. Oil and gas frauds exceeded real estate investment schemes as tiie subject of the top enforcement actions.
This section offers financial planning tools, publications, and podcasts. Although the materials generally target nonexpert investors, financial advisors will find many resources to make available to clients.
The library section contains a variety of publications, ranging from basic pocket guides, to brochures, to podcasts. "The ABCs for APS [Adult Protective Services] Professionals: How to Identify and Report Investment Fraud" is a brief flier designed to help adult protective service workers identify when their elderly clients are subject to investment fraud. It includes facts about financial abuse of elders, warning signs of fraud, and information on how to report complaints.
"Sandwich Generation: Caught in the Middle" offers a unique-and often overlooked-perspective on the life cycle approach to financial planning. Members of this generation not only have their own saving and investing considerations; they are also involved in teaching money management to children, as well as helping older relatives maintain their economic well-being. The brochure provides a useful checklist of action steps.
A podcast archive offers audio recordings primarily focused on fraud. The additional resources feature contains links to more than 50 organizations.
The NASAA's fraud center presents news, alerts, tips, articles, and regulator information, as well as an investment fraud awareness quiz. News, alerts, and tips include the latest financial fraud scams, such as "How to Spot a Con Artist," where rule number one states that con artists like to blend in.
"Top Investor and Small Business Threats" lists the top 10 financial products and practices that can snare unwary investors. The threats are categorized as persistent (continuing) threats, new threats to investors, and new threats to small businesses. An example of a persistent threat is fraudulent private placement offerings, which can be sold to investors without registration and are the primary focus of state securities regulators' investigations and enforcement activities. Allowing an unlicensed individual to set up and manage a trading account on an investor's behalf is one of the newer threats to investors. Another is digital currencies, such as Bitcoin, which are not backed by tangible assets, not issued by a governmental authority, not regulated, and highly volatile.
Susan B. Anders, PhD, CPA, is a professor of accounting at St. Bonaventure University, St. Bonaventure, N.Y.