- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
FINRA requested comments on proposed amendments to FINRA Rules 3220, 3221 and 3222 concerning gifts, gratuities and non-cash compensation. The proposed amendments would effect several changes that include the following:
- consolidating the rules under a single series in the FINRA rulebook;
- increasing the annual gift limit from $100 to $175 per person, and including a de minimis threshold below which firms would not have to keep records of gifts that were given or received;
- amending the non-cash compensation rules to cover all securities products and not just direct participation programs, variable insurance contracts, investment company securities, and public offerings of securities; and
- incorporating existing guidance and interpretive letters into the rules.
In addition, the proposed amendments include a revised approach to internal sales contests for non-cash compensation. The revised approach would require any arrangement that conditioned payment or the reimbursement of expenses associated with achieving a sales target to (1) be based on the total production of all securities products, and (2) not hinge on conditions that would encourage an associated person to recommend particular securities or categories of securities. The proposed amendments also would incorporate a principles-based standard for business entertainment that would require firms to adopt written policies and supervisory procedures for business entertainment.
Comments on the proposed amendments must be submitted by September 23, 2016.
Commentary / Steven Lofchie
Retail firms should pay particular attention to the likely effect of the rule that relates to sales targets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]