WASHINGTON, D.C. – (September 20, 2022) – The North American Securities Administrators Association (NASAA) announced today that its membership has voted to adopt two statements of policy during NASAA’s 2022 Fall Annual Meeting in Nashville.
The NASAA Statement of Policy Regarding the Use of Franchise Questionnaires and Acknowledgments sets standards for the proper use of questionnaires and acknowledgments in franchise offerings. The NASAA Statement of Policy Regarding Peer-to-Peer Lending is designed to provide a framework for the registration and qualification of securities offerings involving peer-to-peer lending.
“Both statements of policy reflect NASAA’s mission to protect investors and support responsible capital formation,” said NASAA President Melanie Senter Lubin. “The franchise statement of policy is designed to better protect franchisees from unscrupulous franchisors that routinely use questionnaires and acknowledgments to try to limit their potential liability to franchisees. The peer-to-peer lending statement of policy sets standards to better protect investors in those products.”
State securities regulators have observed that questionnaires and acknowledgments currently found in some franchise disclosure documents and franchise agreements are inappropriately used by unscrupulous franchisors to defeat claims of fraud and misrepresentation in the franchise sales process.
“By the time prospective franchisees are presented with a franchise agreement or questionnaire to sign, many are emotionally and financially invested in completing the transaction,” said Andrea Seidt, NASAA’s Corporation Finance Section Committee Chair and Ohio Securities Commissioner. “It should be the franchisor’s burden to police its own sales personnel and agents.”
In peer-to-peer lending, online platforms act as intermediaries to match individuals and small businesses seeking to obtain loans with investors to fund those loans. Peer-to-peer lending can be a means by which borrowers obtain needed funds, but investors may face a significant risk of loss and must rely heavily on the lending platform to help mitigate those risks.
The peer-to-peer lending statement of policy sets forth requirements for lending platforms, including demonstrating a platform’s net worth, solvency and regulatory compliance. The statement of policy also requires officers and directors of platforms to be knowledgeable and experienced, requires independent directors to engage in certain oversight activities, and limits the ability of platforms to indemnify their officers and affiliates.
“Our policy sets ground rules for peer-to-peer lending relationships and to help investors in such relationships become better informed,” Seidt added.
Organized in 1919, the North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection. NASAA is a voluntary association whose membership consists of securities regulators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the 13 provincial and territorial securities regulators in Canada, and the securities regulator in México. For more information, visit www.nasaa.org.
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Jeanne Hamrick | Director of Communications
Karen Grajales | Communications & Investor Outreach Manager