A proposal to boost the annual dollar limit on gifts imposed in the rules of the U.S. Financial Industry Regulatory Authority Inc. (FINRA) has been given the green light by the U.S. Securities and Exchange Commission (SEC).
The SEC formally approved the self-regulatory organization’s (SRO) proposal to raise the limit on gifts from US$100 to US$300 per person, per year — along with other changes to codify existing FINRA guidance aspects of the “gifts rule” such as valuation, aggregation, supervision and recordkeeping requirements, and setting out exceptions (such as bereavement gifts).
The rules, which don’t apply to gifts from firms to their own reps, or gifts to retail clients, aim to avoid conflicts of interest that could arise when a brokerage firm or rep provides gifts to industry customers, vendors, or counterparties in an effort to influence business relationships.
The limit imposed in the gifts rule was last adjusted in 1992. FINRA said boosting the cap to US$300 gift “should account for ongoing inflation at current levels for approximately 10 years, thereby reducing the frequency of future upward adjustments to account for inflation.”
The SRO said it intends to periodically review the limit to determine if further increases are needed.
The proposed change is part of a broader effort by the SRO seeking to modernize its rulebook.
“These amendments represent a significant step toward modernizing the rules, while codifying existing guidance in a manner that will promote efficiency without reducing protection for investors,” FINRA said in a notice announcing the change.
The new limits take effect March 30.