FINRA is the acronym for the Financial Industry Regulatory Authority. Although the name sounds governmental, FINRA is actually a private corporation that oversees brokers and markets dealing with stock exchanges. The goal of FINRA is to ensure ethical and fair trading practices throughout the nation. One of the ways FINRA works to meet this goal is through establishing policies around corporate gifts. The main point of the FINRA gift policy is that business related gifts should be under $100 in value.
The reason it is important to monitor corporate gifts is because they can lead to fraudulent behavior. Almost all publicly held companies are required to maintain a corporate gift policy to avoid potential fraud. Fraud occurs when a large dollar gift sways a business partner, customer, or vendor in a business decision.
A possible example of fraud can be seen in a relationship between a large broker and wealthy investor. The investor may want to ensure a certain stock does well for his own financial purposes. The investor might offer the broker season tickets for his favorite professional sports team or an all-expense paid ski week in Colorado. In exchange, the investor might want the broker to encourage clients to buy or sell stock the broker would not otherwise endorse. This represents a type of financial fraud.
Everyone can agree fraud of this type should not be allowed. However, when it comes to monitoring gift compliance, many companies run into trouble. Most companies must prepare a financial disclosure statement of some kind on a quarterly or yearly basis. Depending on the company, corporate gifting may need to be a part of this statement. Publicly traded companies often have hundreds or thousands of employees, and gathering data about gifts can be an enormous task.
Employing the use of an expense and finance tracking software will help companies keep track of spending. This includes expenses related to corporate gifts provided by employees within the company. Corporations may also require each team member to utilize the software to report gifts they received from outside sources such as vendors.
Careful record keeping through the use of good financial compliance software will help companies maintain compliance with FINRA gift policy and procedures. It will also make preparation of financial disclosure statements less stressful, more accurate, and lower labor costs associated with reporting.
- How to Choose the Right Investment Broker (fastswings.com)
- Stock Carnival Ecstasy – June 16, 2011 (fastswings.blogspot.com)
FINRA Gift Policy Fights Fraudulent Business Practices by Steve