On January 22, 2026, FINRA filed proposed amendments to FINRA Rules 5110 and 5123 with the Securities and Exchange Commission. The proposals were published in the Federal Register on January 27, 2026, and are currently subject to SEC review.

These proposed amendments are the result of industry engagement, including formal comments submitted by ADISA’s Legislative & Regulatory Committee in response to Regulatory Notice 24-17 in March 2025.  ADISA followed up with FINRA staff to provide additional context and perspective on the retail alternative investment marketplace.

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Key Policy Implications for ADISA Members

Rule 5110 – Treatment of Seed Capital Investments
FINRA proposes adding new Supplementary Material .05, which clarifies when certain seed capital investments in DPPs and REITs would be excluded from the definition of underwriting compensation. If adopted, this provision would establish a self-executing exclusion, providing greater regulatory certainty and reducing interpretive ambiguity.

• To qualify for the exclusion, the following conditions must be met:
• The capital investment is disclosed in the prospectus
• The offering and securities are valued based on net asset value (NAV)
• The offering is subject to FINRA Rule 2310 (Direct Participation Programs)
• The securities are restricted from resale for 180 days following the commencement of sales

This proposal is intended to better align regulatory treatment with economic substance while maintaining investor protections.

Rule 5123 – Expansion of Accredited Investor Categories
FINRA has proposed updates to Rule 5123 to, among other things, conform with the SEC's 2020 amendments to the accredited investor definition. The proposal would recognize additional investor categories that are already permitted under federal securities law but not currently reflected in FINRA's private placement rule.

Newly included categories would encompass:

• Certain entities with more than $5 million in investments that are not formed for the purpose of acquiring the offered securities
• Qualifying family offices with more than $5 million in assets under management and sophisticated investment decision-makers

These changes would modernize FINRA's rule framework and reduce regulatory friction in private placement transactions.

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ADISA Engagement
ADISA will continue to monitor the SEC review process and advocate for regulatory outcomes that support capital formation, investor access, and appropriate oversight. Members will be kept informed of material developments and any implementation timelines.