New Rules Strengthen Protections for North Dakota Investors

BISMARCK, N.D. - As more North Dakotans invest in private funds and alternative investments, clear rules and protection matter more than ever. Today, the North Dakota Insurance & Securities Department announced a regulatory update that strengthens those investor protections, reduces fraud risk, and aligns the state's securities oversight with nationally recognized standards.

North Dakota has long approached insurance regulation with an emphasis on consistency, coordination, and alignment with federal and multi-state frameworks-a model designed to protect consumers while providing clear expectations for businesses. This Order applies that same proven regulatory philosophy to securities oversight, ensuring investment rules are modern, predictable, and grounded in widely accepted national practices.

As part of an ongoing review of existing securities policies, the Department identified a prior North Dakota-specific approach to regulating certain private investment advisers that differed from how most states and the federal government address the same activity. While well-intended, that framework introduced unnecessary complexity and left North Dakota out of step with national standards. The Order rescinds that approach and adopts the North American Securities Administrators Association (NASAA) Model Rule for Investment Advisers to Private Funds, a framework already used across much of the country and aligned with Securities and Exchange Commission (SEC) definitions.

"This update gives North Dakota investors stronger protections and clearer rules," said Insurance Commissioner Jon Godfread. "By aligning with national standards, we're reducing confusion, improving transparency, and making it easier to identify and address risky or fraudulent activity."

The Order enhances investor protections where risks are highest. For certain private funds that are not traditional venture capital funds, participation is limited to financially sophisticated investors, meaningful written disclosures are required, and annual audited financial statements must be provided. These requirements improve transparency, reduce the risk of fraud, and help investors better understand the products they are considering.

At the same time, the Order clarifies and aligns an exemption available to certain venture capital fund advisers with national practices. This ensures legitimate investment activity can continue without unnecessary regulatory friction, while still maintaining appropriate oversight.

"This is not a rollback of oversight," Godfread said. "It's a modernization that replaces a one-off rule with a proven national standard-strengthening investor protections while making North Dakota a more predictable and competitive place to do business."

The Order takes effect immediately and remains in force unless amended or rescinded by the Commissioner.