ADISA actively scans the legislative and regulatory landscape for opportunities to advocate for its members and educates members on issues that are important to their operation and business. We have updates to share about several issues that our members, particularly our broker-dealer and investment adviser members, should be aware of, which are discussed below. We invite those looking for more information to come to ADISA's Spring Conference (March 30-April 1) at the Loews Arlington Hotel outside of Dallas, TX.

---

First, on the FINRA front, we are pleased to report that (i) FINRA has sent its proposed rule covering certain activities of registered and associated persons to the SEC; and (ii) FINRA has added a new response to its FAQs for Rule 2310 that addresses limited liability companies (LLCs) under the Rule.

Proposed FINRA Rule 2310
FINRA has now filed proposed Rule 3290 with the SEC. The new Rule, entitled “Outside Activities Requirements,” would replace existing FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person). According to FINRA, the requirements of Rule 3290 “focus on outside activities appropriately within members’ purview that potentially present heightened risks for members and the public.”

The new Rule has been under consideration for some time and is amended from prior versions in some important respects. In particular, on a point that ADISA focused on in its most recent comment letter to FINRA on the proposed Rule, Rule 3290 would “eliminate the requirement for members to engage in supervision and recordkeeping of outside unaffiliated IA activities…,” although such activity “would continue to have prior written notice and upfront assessment obligations.

The filing can be found at  SR-FINRA-2026-001. ADISA’s comment letter, which was cited multiple times in FINRA’s filing, is also available on FINRA’s website.

Rule 2310 FAQ Response
FINRA Rule 2310 is applicable to "Direct Participation Programs" (DPPs) and REITs and sets forth many fundamental rules and requirements applicable to the distribution of non-listed REITs and DPPs, including limits on organizational and offering expenses. DPPs are defined as programs "which provide for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution.

Until now, there has been a question as to whether entities organized as LLCs qualified as DPPs under Rule 2310 (much of the industry consisted of limited partnerships rather than LLCs when the Rule was introduced). Based on ADISA's efforts, which were spearheaded by L&R Committee heads Catherine Bowman and Deborah Froling, FINRA has now added a new response to its Rule 2310 FAQs making clear that LLCs that are taxable as partnerships are DPPs for purposes of the Rule. This clarification removes any potential uncertainty for issuers organized as LLCs and should help ADISA members carry out compliance with Rule 2310 with more confidence.

Gabriela Arguelo, FINRA’s Vice President for Corporate Financing, will be at ADISA's Spring Conference. Gaby will attend the Broker-Dealer Advisory Committee session on Monday, March 30.

---

SEC Rulemaking to Redefine 'Small' RIAs
In what is likely to be an important development for investment advisers, the SEC recently proposed a rule change that would deem any investment advisor with fewer than $1 billion in assets under management a “small entity” and subject such firms to regulations appropriate to their size.

The proposal would amend Rule 0-7 under the Investment Advisers Act, which defines a small entity for purposes of the Regulatory Flexibility Act of 1980, to change the definition of small firm from $25 million in AUM to $1 billion. The Reg Flex Act was created to create nuance in how rules are applied by the size and nature of organizations. Under this proposal, 97% of RIAs currently classified as large would be deemed “small.”

While the change would not immediately alter any existing SEC rules, it would play a key role in how current rules are viewed as well as how new rules are drafted. To quote SEC Chairman Paul S. Atkins. “today’s proposal – consistent with the SEC’s intent to modernize regulatory requirements – would further this commitment by more accurately capturing the types and numbers of investment advisers and investment companies that are ‘small.’"

ADISA’s RIA Council will discuss this topic at ADISA’s Spring Conference on Monday, March 30.

---

DOL Rulemaking on Alternatives in Retirement Plans
On Wednesday, Jan. 14, the DOL submitted its proposed rule, entitled “Fiduciary Duties in Selecting Investment Alternatives,” to the Office of Management and Budget (OMB) for final review.

The specifics of the new rule will not be publicly available until OMB completes its review.  There is a general sense, however, that the DOL will try to release the proposed rule by the February 3rd date referenced in the President’s August 2025 Executive Order, entitled “Democratizing Access to Alternative Investments for 401(k) Investors.” While there are many directions that this rulemaking may take, there is some support for the idea that the proposal will include a fiduciary “safe harbor” relating to the use of alternative investments in defined contribution plans.

ADISA will continue to participate in discussions around the DOL’s rulemaking activity relating to alternative investments and ERISA’s strict fiduciary standards. For those that want to get up to speed with the August Executive Order and the direction that any new regulatory developments may take, listen to ADISA’s webinar, ”Private Markets in the 401(k) Space: Navigating the New Rules."