New guidance from the group of U.S. state and Canadian provincial regulators, the North American Securities Administrators Association (NASAA), incorporates a best interest standard for brokers recommending REIT investments.
At its annual conference in Arizona, the members of NASAA approved a set of proposed changes to its guidance on real estate investment trusts (REITs), including an amendment to adopt a best interest conduct standard for broker-dealer recommendations.
Additionally, the revisions update suitability requirements, and require issuers of non-traded REITs to set concentration limits on their offerings.
“The amendments strengthen investor protections and reinforce the importance of responsible REIT practices,” said William Beatty, co-chair of NASAA’s corporation finance section and director of the Washington securities division, in a release.
NASAA’s guidance aims to protect retail investors by guarding against unsuitable sales, promoting fiduciary duties for REIT sponsors and advisers, regulating sales practices, and setting standards for dealing with conflicts of interest, leverage and investor suitability thresholds. It also covers disclosure, marketing and investor rights.
“By incorporating applicable conduct standards for those selling or recommending REIT investments and updating investor suitability requirements, the updated guidelines reinforce NASAA members’ commitment to fair and responsible REIT practices,” added Faith Anderson, chief of registration and regulatory affairs in the Washington securities division.