In today’s age of remote work, it’s easy to think your gift and entertainment policy may not hold as much weight as it once did. Many live events are still limiting capacity and enforcing social distancing, travel opportunities are few and far between and budgets have been downsized, all in the name of COVID-19.
If you’re sitting there thinking to yourself “well, that’s just one less thing our compliance team has to worry about this year,” I may urge you to reconsider. Gift and entertainment-related risks haven’t gone away, they’ve just evolved, and so too will your policies and procedures to keep pace.
The first step? Addressing what hasn’t changed.
Because remote work is introducing more questions about gift and entertainment expenses, it’s important to communicate that the broad contours of your policy remain the same. It should warn employees against lavish gifts, travel, and entertainment for any customers. If your firm maintains a strict pre-approval process, remind them of that, and spell out exactly how employees can request exceptions to whatever policy you have.
Now, it’s time to tackle exactly what has changed. Remember that outdated policies create ambiguity.
Take some time to answer the following questions: What temporary conditions does your firm have in place? As restrictions are lifted, how will your policies change? How will these changes affect the upcoming holiday season? How do you view gift giving during virtual events hosted by an associated person of your broker-dealer?
Last year, FINRA released new guidance addressing virtual meetings and entertainment events. Previous guidance issued by FINRA addressed only in-person meetings.
Here are the important takeaways from that notice:
$100 Gift Limit – FINRA will view the associated persons’ provision of reasonable amounts of food and beverage to be consumed during that event as not subject to the $100 gift limit imposed by Rule 3220, provided that the cost of the food and beverage and the frequency with which it is provided do not raise questions of propriety and are not conditioned on a sales target.
Controls – FINRA suggests that, as hosts, the associated persons who send the food and beverage should control who can participate in the meeting, interact with each participant, and remain present and visible throughout the meeting.
Records – FINRA advises that members should maintain records of virtual meetings and events, including information about the food and beverage provided, in a manner similar to record-keeping for in-person meetings and events.
These are the sorts of policy challenges compliance officers are likely to encounter as we deal with this “new normal.” The traditional gift and entertainment transactions will likely return soon enough, but until then, compliance officers will have their hands full deciphering which of their policies need to be adjusted for the current work-from-home arrangements.
To learn more about Quest CE’s Gift/Entertainment Tracking solution, click here.