FINRA Issues FAQ on Virtual Business Entertainment

FINRA's Answer: "The provisions permitting business entertainment do not specify whether the entertainment must be in-person. Nevertheless, a key distinction between gifts and business entertainment is that the latter involves an associated person of a member personally hosting employees of institutional customers or third-party broker-dealers and their guests, rather than simply giving those employees something of value. Accordingly, where a member firm's associated persons personally host an interactive virtual business entertainment event or meeting, FINRA would view the associated persons' provision of reasonable amounts of food and beverage designed to be consumed by the recipient employees and their guests during that virtual business entertainment or meeting as not being subject to the $100 gift limit, provided that the cost of the food and beverage as well as the frequency with which it is provided do not raise questions of propriety."

Also, FINRA states, providing food and beverage "must not be preconditioned on achieving a sales target."

As hosts, "the associated persons who send the food and beverage should control who can participate in the meeting, interact with each participant during the meeting, and remain present and visible throughout the meeting, which may be part of a larger video setting involving entertainment," FINRA explains.

The member firm or its associated persons also "should not provide any other cash or noncash compensation (such as gift cards or other non-food items) to the recipient employees or their guests."

— Check out FINRA May Modify Rulebook, Supervision in Light of Virus on ThinkAdvisor.