In a move aimed at keeping up with the rate of inflation, the Financial Industry Regulatory Authority is seeking to raise its limit on gifts, ThinkAdvisor reports.
The proposal would boost the gift limit from $100 to $250 and was filed recently with the Securities and Exchange Commission, which must give its approval. The last increase was approved by the SEC in 1992, from $50 to $100.
The action would revise FINRA Rule 3220, which “prohibits any member or person associated with a member, directly or indirectly, from giving anything of value in excess of $100 per year to any person where such payment is in relation to the business of the recipient’s employer. The rule also requires members to keep separate records of all payments or gratuities in any amount known to the member. The rule seeks to avoid improprieties, such as conflicts of interest, that may arise when a member or an associated person gives items of value to an employee of another person, such as an institutional customer, vendor or counterparty with the hope of strengthening the business relationship with the Institutional Customer.”
The proposal also would make a conforming change to the gift limit in Rule 2310 (Direct Participation Programs), Rule 2320 (Variable Contracts of an Insurance Company), Rule 2341 (Investment Company Securities), and Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements).
The plan includes other modifications to the Gifts Rule. These include codifying existing guidance that the rule does not apply to personal gifts, items of de minimis value, promotional or commemorative items, or donations due to federally declared major disasters. It also would make clear that the Gifts Rule does not apply to gifts to individual retail customers. Furthermore, it would extend the $250 limit to other rules that cover similar expenses, including those impacting direct participation programs, variable contracts, investment company securities and corporate financing.
In addition, FINRA is asking that the SEC grant it the authority to issue conditional or unconditional exemptions for “good cause shown,” so that the authority can consider unique circumstances across various types of firms.
FINRA said it “believes the proposed rule change would promote efficiency without reducing protection for investors and the public interest,” and added that boosting the gift limit to $250 would “continue to permit the exchange of business courtesies while helping to guard against excessiveness.”
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