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NASAA REIT Proposal Garners Objections from Industry Advocates

IPA and ADISA submit comment letters in which they oppose the proposal NASAA release

The North American Securities Administrators Association (NASAA), a non-profit association of state, provincial, and territorial securities regulators, received public comment on proposed revisions to its non-traded real estate investment trust guidelines from the Alternative & Direct Investment Securities Association (ADISA) and the Institute for Portfolio Alternatives (IPA).

In July, NASAA published the proposal and set a deadline for comments. Originally, this deadline was Aug. 11, 2022, but it was extended to Sept. 12, 2022.

ADISA and the IPA, the two leading advocacy groups representing the non-traded alternative investment space, submitted comment letters in which both groups voiced objections to the NASAA proposal. 

“If NASAA is to have a positive impact on investing behavior for smaller and newer investors as well as those with substantial resources, it should look at ways to enhance and not limit the availability and usability of alternatives in investor portfolios,” ADISA’s letter stated. “All too often regulators are forced to rectify problems created by action or inaction of others. ADISA suggests that this is a rare opportunity for NASAA to create regulations that are not based solely on preventing bad behavior but instead that can also encourage well-informed independence by making sure investors of all stripes have access to the greatest number of alternative investments while ensuring investor protections.”

The two advocacy groups agree that NASAA is seeking to address issues that would do more harm than good to investors.

“Both institutional and retail investors need access to alternatives to diversify their investment portfolios,” said Anya Coverman, senior vice president and general counsel at the IPA. “The proposal on the table would prevent many retail investors from doing so. Bottom line: NASAA needs to go back to the drawing board. As a constructive advocate in this process, the IPA provided six clear reasons why that reconsideration is necessary.”

NASAA’s membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the 13 provinces and territories of Canada, and the country of Mexico. NASAA members are responsible for administering state and provincial securities laws.

The Alternative & Direct Investment Securities Association bills itself as the nation’s largest trade association representing the non‐traded alternative investment space. ADISA’s members are typically involved in non-traded real estate investment trusts, business development companies, master limited partnerships and private and public funds (LPs/LLCs), 1031 exchange programs (DSTs/TICs), energy and oil and gas interests, equipment leasing programs, or other alternative and direct investment offerings.

The Institute for Portfolio Alternatives is an advocacy and education group for the non-traded alternative investment industry. The organization seeks to raise awareness of investment products with low correlation to the equity markets, which include non-traded real estate investment trusts, business development companies, interval funds and direct participation programs.

For more ADISA news, please visit their directory page.

For more IPA news, please visit their directory page.