NASAA Members Adopt Conduct Rule Amendments to More Align With Reg BI

The North American Securities Administrators Association, or NASAA, announced that members have voted to adopt proposed amendments to NASAA’s Dishonest or Unethical Business Practices of Broker-Dealers and Agents model rule, i.e., the Conduct Rule. The amendments were previously released for public comment on Nov. 4, 2024. The modifications update the Conduct Rule to more closely align with the U.S. Securities and Exchange Commission’s adoption of Regulation Best Interest, or Reg BI.

Most notably, the amendments incorporate Reg BI’s best interest duty of care for investment recommendations to retail customers into the Conduct Rule. In addition, the Conduct Rule now expressly prohibits potentially misleading uses of the titles “adviser” or “advisor” by broker-dealer agents. The adopted amendments will boost investor protection and help foster uniformity on these important issues across federal and state law.

“I want to thank the members of NASAA’s Broker-Dealer Section Committee and Market and Regulatory Policy and Review Project Group for their work on the amendments to the model rule,” said Leslie Van Buskirk, president of NASAA. “We look forward to working with our fellow NASAA members to implement these updated standards.”

The NASAA Broker-Dealer Section Committee and Market and Regulatory Policy and Review Project Group requested membership approval for the amendments to the Conduct Rule.

These changes will ensure that the Conduct Rule defines and clarifies various obligations or components of this new conduct standard for purposes of state interpretation and enforcement.

Last month, NASAA began receiving public comment on proposed amendments to its Statement of Policy Regarding Real Estate Investment Trusts, also known as REIT Guidelines.

This proposal follows up on a previous proposal to amend the REIT Guidelines issued by NASAA on July 12, 2022. While retaining substantial portions of the 2022 proposal, one significant change is the removal of the prohibition on the use of gross offering proceeds for investor distributions. Comments are due on or before May 28, 2025, and will only be accepted by email.

NASAA’s membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the 13 provinces and territories of Canada, and the country of Mexico. NASAA members are responsible for administering state and provincial securities laws.

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