March is known for two thing: cold weather and (depending on who your favorite team is) increased gifts and entertainment risk. Whether it’s FINRA Rule 3220 or Chapter 10 of the FCA Handbook guiding your gifts and entertainment philosophy, in order to mitigate risk, your firm must establish and convey a clear policy for gifts large and small.
For those of you who haven’t quite gotten around to actually writing down a formalized policy, we’ve put together a list to help you determine what to include and how to go about ensuring your policy is followed to the letter.
Drafting Your Gifts and Entertainment Policy
Your policy will be unique to your firm’s specific requirements and needs. However, it should cover some key basics to ensure you aren’t negating or outright ignoring a critical gifts and entertainment risk factor.
Step 1: Define Gift vs. Entertainment
The difference between gift and gratuity vs. entertainment can be a fine (but extremely important) line. Clearly defining what constitutes a gift rather than simply entertainment within your policy will help ensure all employees understand the difference and what they are able to accept should a client or outside firm come knocking with a couple of highly sought after basketball tickets.
Step 2: Define Nominal vs Promotional
Clearly defining nominal value will help your employees follow best practices and avoid potential mistakes. Typically, this value will land around the $100 mark, based on FINRA and MSRB rules, however it is beneficial to state specifics for your firm and its employees.
Pro Tip: Provide clear examples for employees to follow. This will help reduce missteps and better align your employee’s understanding of nominal value.
Step 3: Required Reporting
From pre-approvals to reporting on discrepancies, your firm’s policy should reflect exactly what’s required from your employees and your compliance team. And you’ll be happy you did should a regulator ever ask to see your reports.
Step 4: Train Your Team
The key to success? Contextualizing the why behind your gifts and entertainment policy. By giving your team clear insight into what’s required and why you require it, not only will you increase buy-in, but you’ll also increase participation.
ComplySci for the Assist
Now that you’ve got you policy in place, it’s time to start tracking and monitoring. How? That’s where ComplySci comes in.
1.Customized Preclearance and Disclosure
Set your firm up for success with customized preclearance requests that allow your employees to easily submit requests for any gifts about to hit their inbox or mailbox.
2. Easy-to-Use Technology
Speaking of easy, user experience is key to participation. Which is why the ComplySci® platform was built to make every experience (from Account Manager to Adviser to CCO) as easy as possible.
3. Automated Processes
Pen and paper have no place in today’s compliance world. Monitor activity, approve requests, and track potential violations all within one platform. Automate and elevate.
4. Verifying Violations
Potential violations = potential risk for your firm. Something which can be hard to track if you’re relying on personal accountability and that old Excel spreadsheet.
5. Expert Reporting
Access all your reports within one click of a button, easily producing the necessary documentation to answer any regulator’s questions.
Let’s leave the games to the sports players. Discover how ComplySci can help streamline your compliance program and mitigate Gifts and Entertainment risk.