ADISA appreciated the opportunity to comment on behalf of its members on Regulatory Notice 24-17: Capital Formation to the FINRA Corporate Financing Rules.

ADISA believes that many of the proposed changes to the CF Rules will be beneficial to its members; however, ADISA has the following specific comments on the Notice.

-     Safe Harbors: Exclusions From Underwriting Compensation

1. ADISA recommends that, in addition to those investments made concurrently with or in advance of the public offering, additional contributions of seed capital should not be considered underwriting compensation and should be included in the safe harbor exclusion, subject to the same conditions set forth in the proposed revision.
2. ADISA recommends that the safe harbor restrictions fully align with the NASAA REIT Guidelines.
3. ADISA recommends that for the purpose of calculating the lockup restriction period, FINRA use the definitive date of effectiveness of the offering as a measurement rather than commencement of sales.

-     Proposed Amendments to Rule 5123.

1. ADISA urges FINRA to include additional categories of accredited investors to the exemptions for filing private offerings as the definition of accredited investor continues to evolve.
   

The letter was drafted by ADISA’s Legislative & Regulatory Committee Co-Chairs Deborah Froling, Kutak Rock, and Catherine Bowman, The Bowman Law Firm. It was signed by ADISA President John Grady, ABR Dynamic Funds.

Read the letter in its entirety here.