IPA Submits Comment Letters on Behalf of Portfolio Diversifying Investments Industry
As many of you already know, in addition to our advocacy efforts in Washington, D.C., we are actively engaged in advocacy efforts at the state level and regularly work with individual states on targeted issues.
A cornerstone of our state advocacy efforts is our work in the state of Ohio, where we are currently focused on two issues that are intimately germane to our industry. Last week, we submitted two comment letters to Ohio officials.
Comment Letter on Division of Securities Rulemaking Practices
On March 21, we submitted a letter to the Ohio Department of Commerce and Lieutenant Governor, as part of the five-year, mandatory rule review process (JCARR) of all Ohio agency rules. Our comments point out that the Division of Securities has significant rules and legal standards not subject to that formal process, including its “merit review” standards, and that the Division applies the incorrect legal review process to filings registered by both the Securities and Exchange Commission and Ohio.
Our letter urges the Ohio Department of Commerce and the Common Sense Initiative to require that the Division go through the standard JCARR rulemaking process for corporate finance filings that have been imposed by the Division of Securities at its discretion outside of a formal rulemaking process.
The Common Sense Initiative is currently reviewing all comments and determining next steps.
Response to Letter from the Division of Securities
Today, on March 29, we submitted a letter to Ohio Representative Jean Schmidt in response to a letter she received from the Division of Securities, which continues to reflect its bias against non-listed products.
The Division’s letter, sent in early March, was filled with distortions and mischaracterizations of our industry. Our response sets out to make two essential points. First, in regulating REITs and BDCs, the Division exceeds its statutory authority and evades the JCARR rulemaking process. Second, the Division does so because it holds a bias against these products, which is not grounded in an understanding of their purpose or structure.
This is a much broader letter that we expect will be shared with leadership of the Ohio House Finance Subcommittee on Agriculture, Development and Natural Resources.
Our efforts this week build on past actions in Ohio including:
- A letter to Andrea Seidt, Commissioner of the Ohio Securities Division, in response to a Cover Story in the 2nd Quarter 2020 Ohio Securities Bulletin titled “Registration Section Review of Issuer Advertising”
- A letter the IPA submitted in response to a critique of non-listed REITs in the 1st Quarter 2020 Ohio Securities Bulletin titled “Private Indexes in Advertising and Non-Traded REIT Valuations”
- A letter the IPA submitted in response to the Division’s objection to issuers’ ability to use offering proceeds to fund distributions
State advocacy is one of our 2021 policy priorities. In addition to our work on targeted issues in specific states, we will continue to conduct outreach and broaden engagement with both state regulatory agencies and NASAA to further establish ourselves as the leading resource on alternative investment strategies and portfolio diversifying investment products.
If you have any questions, please don’t hesitate to reach out to Tony or me.
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives