SEC Approves FINRA Amendments to Gifts Rule

The amendments modify FINRA Rule 3220 ("Influencing or Rewarding Employees of Others") to increase the annual limit on gifts given by member firms and associated persons to employees of others. The amendment accounts for inflation since the limit was last set in 1992. The changes also codify existing interpretive guidance into the rule text to improve regulatory clarity and consistency regarding the valuation, aggregation, and supervision of gifts.

Under the approved amendments:

• The annual gift limit was increased from $100 to $300 per person per year, with corresponding increases to the limits in FINRA’s non-cash compensation rules;
• Specific categories of gifts were expressly excluded from the rule's limits and recordkeeping requirements, including "personal gifts" for infrequent life events (provided the member does not bear the cost), bereavement gifts, de minimis or promotional items, and donations related to federally declared major disasters;
• Members must value gifts at cost (exclusive of tax and delivery charges) rather than market value, though tickets to events must be valued at the higher of cost or face value;
• Gifts given during the course of business entertainment were explicitly subject to the gift limit unless they qualify for a specific exclusion, such as being a de minimis promotional item; and
• FINRA was authorized to grant exemptive relief from the rule "for good cause shown."

FINRA stated that raising the limit to $300 reflects changes in purchasing power and accounts for expected future inflation for approximately ten years. FINRA noted that codifying existing guidance regarding valuation, aggregation, and supervision is intended to facilitate compliance and reduce ambiguity for member firms.