During the holiday season, and throughout the year, many registered representatives (“RRs”) and associated persons (i.e. fingerprinted persons) give or receive gifts and/or entertainment. While industry rules and regulations allow for the giving and receiving of business-related gifts and entertainment, there are certain limitations and reporting responsibilities that apply. Business-related gifts or entertainment, given or received, must be reported to your supervisor and Compliance through Star Compliance (“Star”).
What to Report/What Not to Report
Gifts
Gifts to/from clients, business partners, product sponsors, and prospects must be reported.
- Gifts given/received to/from any individual/firm may not exceed $100 per person per calendar year.
- Gifts to labor union employees and public officials require PRIOR approval.
- Gifts given/received before, during, or after entertainment must be reported.
- Consumable gifts (e.g. food, wine), even if a promotional item, must be reported.
- Gifts given to home office employees must be reported.
- If expensing a gift or treating the gift as a business expense, the gift must be reported.
- Reporting of gifts should be done within two weeks of giving or receiving.
The following are NOT required to be reported:
- Promotional items under $75 (items with a company logo).
- Gifts given to employees or other RRs within your own office.
- Personal gifts to immediate family members who also happen to be customers, where the gift is unrelated to the Firm’s business, and occasional personal gifts to others not taken as a business expense.
Entertainment
Entertainment of customers or prospective customers must be reasonable and not so expensive it raises a suggestion of unethical conduct.
The limitation on gifts and gratuities does not apply to usual business entertainment such as dinners or sporting events where you host the entertainment, though such expenses should be reasonable. “Entertainment” includes a broad range of activities such as trips, parties, and other activities where you host someone related to the Firm’s business. Questions regarding the reasonableness of proposed entertainment and related expenses should be referred to Compliance.
You may invite clients to entertainment or accept entertainment from a product sponsor provided that:
- The entertainment is not frequent, lavish or excessive as to raise a suggestion of unethical conduct.
- The entertainment is not based on meeting a sales target.
- You comply with state insurance department anti-rebating rules.
- You attend with the client (if you are giving the entertainment) or with the product sponsor (if you are receiving the entertainment). Otherwise, it is a gift and subject to the $100 gift limit.
- Items given/received before, during, or after the entertainment are considered gifts. These gifts must be submitted, through Star Compliance, for review and approval by your Branch Office Supervisor (“BOS”) or their appointed delegate and Compliance.
Prior approval is required for entertainment being given or received that:
- Involves airfare and/or an overnight stay.
- Is estimated over $300 per individual. This includes:
- $300 per individual for entertainment you give.
- $300 per product sponsor for entertainment you receive.
- Could be construed as frequent, lavish, or excessive for review to determine its appropriateness.
To obtain prior approval for entertainment, you must complete an Entertainment Declaration request via Star Compliance, and submit it to your BOS (or their appointed delegate), who will approve and forward the request to Compliance for review and maintenance. You may not engage in the entertainment until approval is received.
How to Report
Go to https://nationallife.starcompliance.com:
- Your Login is your 5-digit rep code. If you do not recall your password, you may click “Forget your password” to reset it. Once in Star, click the “Gifts” box to report a gift.
- For instructions on how to complete the form, please refer to the below links:
Delegation of Reporting
If you wish to have a non-registered fingerprinted person (“NRF”) complete your gift logs, they may enter them for you in Star as a “proxy”. To have them designated as your gift proxy in Star, please email ESICompliance@nationallife.com with their contact information.
Questions?
If you have questions, please feel free to contact Ben Zarzycki in ESI Compliance at 802-229-3659 or bzarzycki@nationallife.com.
TC137668(1123)1