FINRA Seeks Public Comment on Changes to Gifts, Non-Cash Compensation Rule
The Financial Industry Regulatory is proposing amendments to the gifts, gratuities and non-cash compensation rules to consolidate the rules under a single rule series in the FINRA rulebook. It seeks to increase the gift limit from $100 to $175 per person per year and include a $50 de minimis threshold, below which firms would not have to keep records of gifts given or received.
They are also proposing to change the non-cash compensation rules to cover all securities products, not just direct participation programs, variable insurance contracts, investment company securities and public offerings of securities.
The regulators are interested in revising their approach to internal sales contests for non-cash compensation so that if payment or reimbursement of expenses is preconditioned on a sales target, then it must be based on the total production with respect to all securities products and not encourage an associated person to recommend particular securities or categories of securities.
Finally, FINRA is proposing to incorporate a principles-based standard for business entertainment that would require firms to adopt written policies and supervisory procedures to detect and prevent improper quid pro quos. The policies would also define permissible and impermissible business entertainment and would require appropriate training and education of all personnel who supervise, administer, or are affected by the policies and procedures.
FINRA is seeking comment on proposed amendments to FINRA Rule 3220 (Influencing or Rewarding Employees of Others), as well as on proposed FINRA Rule 3221 (Restrictions on Non-Cash Compensation), and proposed FINRA Rule 3222 (Business Entertainment).
Questions should be directed to Victoria Crane, associate general counsel, office of general counsel, at (202) 728-8104; or Joseph Savage, vice president and counsel, regulatory policy, at (240) 386-4534.
FINRA encourages all interested parties to comment on the proposal. Comments must be received by September 23, 2016 and can be submitted via email at pubcom@finra.org or by mail to:
Marcia E. Asquith
Office of the Corporate Secretary, FINRA
1735 K Street, NW
Washington, DC 20006-1506
