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. (Lucite tombstones to commemorate a transaction are allowed, but crystal bowls or leather handbags are not allowed.)
- • 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.
- • Representatives of dealers are allowed to give personal gifts, such as wedding gifts, as long as the firm does not pay for the gift and it is not considered to be part of the business of the employer.
Example Question 1
Per MSRB Rule G-20 on gifts and gratuities, which of the following would not be acceptable?
- A. A dealer providing a set of 150 small calendars that display the firm’s logo that cost over $150 to produce
- B. A representative inviting personnel of an issuer to a sporting event hosted by the dealer where the tickets cost $150 (meaning, reps attended the event as well)
- C. A representative sending a wedding present to an employee of the issuer that cost over $100 and was paid for by the firm
- D. The dea