As we enter the holiday season, let’sgift-1420683 review the FINRA Rule (3220) on gifts and gratuities. To make sure no one improperly influences or rewards others, FINRA draws a bright line distinction and simply prohibits any business gifts or gratuities in excess of one hundred dollars per individual per year.

Permissible and Prohibited Gifts

Vanessa, a registered rep, wants to send her clients a holiday gift. It would be permissible for her to send gifts to each of her clients provided no single client receives anything of more than $100 in value.

Example:

  1. One $99.00 bottle of wine: Permissible
  2. Two $75.00 tickets to a sporting event: Not permissible (since total value is $150)

What is not considered a gift?

  1. Vanessa takes clients to a $250, fixed-price dinner. Because Vanessa attends, this is not considered a gift and is permissible
  2. Vanessa takes clients to a professional sporting event where the tickets each cost $150. This is permissible provided Vanessa also attends.

By Vanessa attending the two events above, these are not considered gifts, and therefore not subject to the $100 limitation.

Knopman Note

Being familiar with the rules on gifts and gratuities is an important part of your preparation for your FINRA exam. Be sure to have a firm grasp on these rules if you are preparing for the Series 7, Series 79, or Series 24.

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