On August 8, the Financial Industry Regulatory Authority issued Regulatory Notice 16-29, which solicits comments to proposed amendments to FINRA’s gifts, gratuities and non-cash compensation rules (FINRA Rule 3220 (Influencing or Rewarding Employees of Others), proposed FINRA Rule 3221 (Restrictions on Non-Cash Compensation), and proposed FINRA Rule 3222 (Business Entertainment)).
To better align the investor protection objectives of the rules with their economic impact, FINRA is considering, among other things, the following changes: (1) consolidating the rules under a single series in the FINRA rulebook; (2) increasing gift limits from $100 to $175 per person per year; (3) including a de minimis threshold below which member firms would not be required to keep records of gifts received or given; (4) amending the non-cash compensation rules to broadly cover all securities products; and (5) incorporating existing guidance and interpretive letters into the rules. FINRA also is proposing a revised approach to internal sales contests that offer non-cash compensation. In addition to these proposed amendments, FINRA also is proposing to incorporate into the rules a principles-based standard that would require member firms to adopt written policies and supervisory procedures with respect to their business entertainment activities.
The comment period is open until September 23.
Regulatory Notice 16-29 is available here.