An associated person of a member firm is invited to a charitable dinner by an institutional client. The client purchases a ticket for the associated person valued at $200 and attends the event alongside the associated person. Under FINRA Rule 3220, how is this event classified?
- It is permitted as normal business entertainment because the host accompanies the associated person to the event.Answer
- BIt is a prohibited gift because any ticket exceeding $100 in value violates FINRA rules regardless of attendance.
- CIt requires prior written approval and clearance from the Securities and Exchange Commission (SEC).
- DIt is classified as an outside business activity (OBA) requiring pre-approval from state banking regulators.
Answer
The event is permitted as normal business entertainment because the host accompanies the associated person.
Under FINRA Rule 3220, gifts to employees of other firms are restricted to 100 cap does not apply.
Step-by-Step Solution
Key Concept
FINRA Rule 3220 Gift Exceptions and Hosted Business Entertainment
Estimated Time:45s