Limitations on Gifts, Gratuities, and Non-cash Compensation (MSRB Rule G-20)
MSRB Rule G-20 places limits on gifts, gratuities, and non-cash compensation received in connection with the sale and distribution of municipal securities. Dealers may not offer their clients gifts in excess of $100 per year. Non-cash compensation in excess of this amount is, likewise, not allowed.
The following are exceptions to the gift and gratuity restrictions:
- • Occasional gifts of meals or tickets to theatrical or sporting events are allowable if they are hosted by the dealer
- • Dealers may sponsor legitimate business functions recognized by the IRS as deductible business expenses
- • Also allowable are gifts of reminder advertising (pens or calendars that display the firm’s logo), as long as they are not too extensive or given too frequently
- • Dealers may compensate someone for services done, as long as the services and compensation are clearly described in a written contract and the agreement has the written consent of the person’s employer
In a primary offering, dealers cannot accept non-cash compensation, except:
- • Gifts under $100 per person per year that are not preconditioned on achievement of a sales target
- • Occasional gifts of meals or tickets to theatrical or sporting events that are not too frequent or expensive
- • Reimbursement for attending meetings that serve the purpose of training or education. The attendee must receive prior approval from his employer and attendance cannot be preconditioned on achievement of a sales target. The location must be appropriate to the purpose of the meeting, and the payment cannot be applied to guests (e.g., spouse of attendee)
Non-cash compensation be