ADISA provided comments regarding FINRA’s Regulatory Notice 25-06, specifically with regard to Rule 2310 – Direct Participation Programs; Rule 5110 – Corporate Financing Rule – Underwriting Terms and Arrangements; and Rule 5123 – Private Placements of Securities. ADISA previously commented on proposals regarding these Rules and continues to believe that its previously expressed views remain relevant and, hopefully, helpful. ADISA provided cross references to comments contained in prior letters.

1. Rule 2310 – Direct Participation Programs.

   ADISA recommends that limited liability companies which have elected to be treated as a partnership for federal income tax purposes be included in the definition of a Direct Participation Program.

2. Rule 5110 – Corporate Financing Rule – Underwriting Terms and Arrangements.

   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.

   ADISA provided comments to Regulatory Notice 24-17 with regard to the exclusions from underwriting compensation in a letter dated March 18, 2025.

   1. ADISA recommends that the safe harbor restrictions fully align with the NASAA REIT guidelines.
   2. ADISA recommends that for purpose of calculating the lockup restriction period, FINRA use the definite dates of effectiveness of the offering as a measurement rather than commencement of sales.

      ADISA urgers FINRA to provide guidance on what constitutes a reasonable underwriting compensation limit, but assets that due diligence costs should not be classified as underwriting compensation.

      ADISA provided comments to Regulatory Notice 23-09 with regard to categorizing of due diligence expenses as underwriting compensation in a letter dated August 7, 2025.

3. Rule 5123 – Private Placement of Securities

   ADISA provided comments to Regulatory Notice 24-17 with regard to the addition of categories of accredited investors to the exemptions for filing private offerings as the definition of accredited investor continues to evolve in a letter dated March 18, 2025.

4. 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.

ADISA agrees with and appreciates FINRA adding the two additional categories of accredited investor contained in Rule 501(a)(9) and (12) pursuant to Regulation D to the exemption for filing private placement offering documents and retail communications pursuant to FINRA Rule 5123. ADISA believes that FINRA should continue to review and consider adding further categories of investors pursuant to which the exemption for filing would apply as the definition of accredited investor continues to evolve pursuant to future SEC rulemaking or legislation.

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

Read the letter in its entirety here.