Review of Enforcement Activity by the Maine Office of Securities Under Gov. LePage Shows Little Change as Compared to Similar Activity Under the Prior Administration

Monday, May 21, 2012

With some exceptions, the Maine Office of Securities under Gov. LePage has been as active as the Office was under Gov. Baldacci, at least measured by the number of actions taken.

Enforcement-related administrative orders have remained stable in number as compared to recent years. To date, as of January 1, 2012, there have been 9 enforcement-related administrative orders. In 2011, there were 11 enforcement-related administrative orders. These orders dealt with a range of offenses, from acting as a broker-dealer or investment adviser while not properly licensed, failing to comply with prior orders of the Office of Securities, borrowing funds from clients, “unlawful, dishonest or unethical practices” and the sale of unregistered securities. In 2009, there were 9 administrative orders. There were 19 such orders in 2010. At the current pace, the Office of Securities is on track to issue a larger number of administrative enforcement orders than any of the past three years with the exception of 2010. 

To date in 2012, there have been 3 criminal and/or civil enforcement actions. In 2010 and 2011, there were 7 such enforcement actions in each year. In 2008 and 2009, the State brought three enforcement actions. These actions included claims of theft by deception, theft by misapplication and securities, fraud, diversion of money for personal use, and making false statements of material facts. By all accounts, the Office of Securities is on track with the past 2 years in this area.

Recent months have seen a sharp decline in consent agreements. Since January 1, 2011, there have been 4 consent agreements, There have been none so far in 2012. In 2010, 4 consent agreements were executed. In 2009, 3 such agreements were executed. The overwhelming majority of these consent agreements pertained to licensing issues. The Office of Securities has been more active in the past, with 15 such consent decrees in 2006 alone.

The overwhelming amount of actions deal with licensing issues. It seems this will continue to be an issue as more out-of-state investment entities perform work for Maine residents.  Overall, under the LePage administration, enforcement actions have remained fairly constant in number.

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