IPA Challenges Efforts to Repropose NASAA'S REIT Statement of Policy 

As we first alerted you in July, NASAA has been working internally on a reproposed REIT Statement of Policy, which it first attempted to pass in 2022. We have many concerns with what we have learned about the re-proposal to date, including the potential for:  

• A sweeping definition of Direct Participation Programs (DPPs) to include REITs, BDCs, oil and gas programs, equipment leasing programs, commodity pools, and a host of other similar programs.

• Continuation of the problematic concentration limit, but now with the addition of a state “accredited investor” carveout that is narrower and more restrictive than the federal “accredited investor” definition. The carveout also would allow states to take a state-by-state approach that could lead to a confusing and non-uniform approach. 

This summer we have conducted a concerted and vigorous campaign to educate state regulators, partnering with Marc Minor, a seasoned lawyer at Thomson Hine who is a former New York and New Jersey Securities Administrator. Together, we have been leading a targeted campaign to engage state administrators regarding our concerns with NASAA’s reproposal and process. On July 22, IPA sent a letter to regulators in all 50 states urging NASAA not to re-publish the Proposal and to engage in a fairer and more transparent rulemaking process. Our letter highlighted:

• The lack of evidence that more onerous regulation is warranted.  

• Conflicts with federal and state law, and the potential for preemption by federal securities statutes.              

• The unintended consequences of pushing companies away from offering investment vehicles that fall under state regulation.                                                                    

• The failure to address the many outdated and unworkable provisions in the current Policy that do not correspond to modern product structure or operation.  

At NASAA’s annual meeting this week, we learned that a re-proposal is expected before year-end, so this is moving very quickly.