Washington, DC—The Federation of Exchange Accommodators, the national trade organization representing exchange facilitators and others involved in 1031 exchanges, has petitioned the Federal Trade Commission to implement federal regulation of the QI industry. It has done so in an effort “to protect consumers” by putting “safeguards in place to measure the competency of professionals executing 1031 exchanges as well as financial safeguards for consumers and FTC enforcement protocols,” according to an announcement from the FEA.

The petition, submitted to the FTC earlier this month, calls for rules that would: require persons who want to act as exchange facilitators to register with the FTC; require facilitator companies to designate an “exchange facilitator officer” with demonstrated experience and training; require QIs to “act as a custodian of exchange funds and invest in a manner that provides sufficient liquidity and preserves the principal of the exchange funds;” and require facilitators to maintain certain levels of insurance, bonds, letters of credit and/or deposits. It also calls for authorization of the FTC “to revoke or suspend a registration for misrepresentations, failing to account for property belonging to others, or deceptive conduct,” accord to the FEA.

The proposal in large part mirrors the FEA’s own code of ethics and is the result of two high-profile failures of QIs in the past year as well as efforts in some states to adopt regulations of their own. As previously reported in NET LEASE fourm, Nevada recently adopted a new law regulating exchange facilitators, and in addition to a proposal in California, the FEA says it is aware of similar legislative interest in Colorado, Idaho and Washington.

“It seemed like the prudent thing to do was to get out ahead of this,” FEA president Hugh Pollard says, adding that a federal standard would be preferable to different laws state-by-state. “It’s time to do something like this. We were able to rely on the integrity of people in the industry for a long time. I guess the world is changing.”

Earlier this summer, representatives of the FEA met with FTC staff and California Congresswoman Anna Eshoo, who the association says initiated discussions with the FTC about the possibility of a national regulation. Based on the meeting, Pollard says he thinks the FTC feels it has jurisdiction over the matter. He expects the association’s board to receive an update soon on the petition process from its counsel.

The FEA will hold its annual conference Oct. 4 to 6 at the Westin Michigan Avenue in Chicago.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.