On February 12, 2026, the SEC approved FINRA's proposed rule change to amend FINRA Rule 3220 (Influencing or Rewarding Employees of Others) (the “Gifts Rule”).1

Among other things, the amendment:

  1. increases the gift limit from $100 to $300 per gift recipient per year;
  2. makes conforming changes to the limits in FINRA’s “Non-Cash Compensation Rules;”2 and
  3. codifies certain guidance on the Gifts Rule, including an explicit acknowledgement that the Gifts Rule does not apply to gifts to individual retail customers. 

FINRA will announce the effective date of the rule change in a forthcoming Regulatory Notice.

Increase in the Gifts Rule Limit

In general, the Gifts Rule prohibits any broker-dealer that is a member of FINRA (‘‘member’’) or person associated with a member (‘‘associated person’’),3 directly or indirectly, from giving anything of value in excess of $100 per year to any person where such payment is in relation to the business of the recipient’s employer.4 The Gifts Rule also requires members to maintain separate records of all payments made or gratuities given in any amount known to the member.

As the current gift limit of $100 has been in place since 1992, FINRA stated that the increase to $300 reasonably reflects changes to purchasing power due to past inflation and accounts for approximately ten years of expected future inflation.

Conforming Changes to the Limits under the Non-Cash Compensation Rules

The Non-Cash Compensation Rules prohibit members and their associated persons from directly or indirectly accepting or making payments or offers of payments of any non-cash compensation5 to any person in connection with the sale of direct participation programs,6 variable insurance contracts,7 investment company securities,8 and the public offerings of securities.9

While the Gifts Rule primarily addresses gifts given to employees of institutional customers, the Non-Cash Compensation Rules address, among other things, gifts from a broker-dealer to persons associated with a third-party broker-dealer (e.g., from a wholesaler to associated persons of a retail broker-dealer) in connection with the sale and distribution of a security covered by one of the Non-Cash Compensation Rules. Under the Non-Cash Compensation Rules, such gifts are subject to the same gift limit as the Gifts Rule and may not be preconditioned on achievement of a sales target.

To conform to the amended Gifts Rule, the gift limit for the Non-Cash Compensation Rules will also increase to $300.

Codification of New and Existing Guidance in the Gifts Rule

FINRA staff has published guidance interpreting the Gifts Rule as it applies to, among other things:

  • certain gifts given during business entertainment events;10
  • the valuation of certain gifts, including tickets to sporting or other events;11
  • the aggregation of the value of gifts given by a member and its associated persons to a particular recipient over the course of a year;12
  • personal gifts for infrequent occasions (e.g., a wedding gift or a congratulatory gift for the birth of a child);13
  • bereavement gifts (e.g., appropriate flowers or food platter for the mourners);14
  • gifts of de minimis value (e.g., pens, notepads or modest desk ornaments) and promotional items of nominal value that display the firm’s logo (e.g., umbrellas, tote bags or shirts);15
  • donations by a member or an associated person of a member to an individual in connection with a federally declared major disaster;16 and
  • guidance regarding a member’s supervisory obligations.17

The amendment adds supplementary material to FINRA Rule 3220 consistent with these existing pieces of guidance, as well as new material not covered by existing guidance to make the scope of FINRA Rule 3220 more clear. Each supplemental rule section is described below.

Other Gifts Rule Exceptions

FINRA Rule 3220.09 (Gifts to a Member’s Associated Persons or Individual Retail Customers)

Notably, Rule 3220.09 provides new guidance that clarifies that the Gifts Rule does not apply to gifts from a member to its own associated persons or to gifts from a member or an associated person of a member to individual retail customers. This is a welcome clarification as many firms have instituted a blanket $100 gift limit, including with respect to retail customers.  

FINRA declined to define “retail customer” in this context. However, FINRA has stated that, “the Gifts Rule is intended to avoid improprieties, such as conflicts of interest, that may arise when a member or an associated person gives items of value to an employee of an Institutional Customer with the hope of strengthening the business relationship with the Institutional Customer.18 It does not apply to gifts from a member or its associated persons to individuals who are not employees of an Institutional Customer, including individual retail customers.”

Rule 3220.01 (Gifts Incidental to Business Entertainment)

The Non-Cash Compensation Rules permit business entertainment provided by “offerors” (generally product sponsors and their affiliates) to representatives of third-party broker-dealers and their guests that is not subject to the $100 limit as long as it “is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target." FINRA staff has interpreted Rule 3220 to permit similar business entertainment provided to a member’s clients and their guests.19

Rule 3220.01 expressly states that a gift given during the course of a business entertainment event, which, as noted above, itself is not subject to the gift limit pursuant to the 1999 Letter, would be subject to the $300 limit unless it is consistent with the requirements of Rules 3220.04 (i.e., a personal gift) or 3220.06 (i.e., de minimis value), both of which are discussed below. FINRA also states that gifts given incidental to a business entertainment event, such as gift baskets or other items—including gifts of food or beverages in quantities beyond what could reasonably be consumed during the event—would be subject to the gift limit absent another exception.

Rule 3220.04 (Personal Gifts)

Prior FINRA guidance20 states that the prohibitions in the Gifts Rule generally do not apply to personal gifts. Rule 3220.04 largely codifies this guidance and also provides a carveout from the recordkeeping requirements in FINRA Rule 3220(c) for such gifts. However, three other notes regarding personal gifts are important to bear in mind.

First, FINRA Rule 3220.04 provides that gifts that are given for infrequent life events (e.g., a wedding gift or a congratulatory gift upon the birth of a child) are not subject to the gift limit restrictions in FINRA Rule 3220(a) or the recordkeeping requirements in FINRA Rule 3220(c), provided the gifts are customary and reasonable, personal in nature, and not in relation to the business of the employer of the recipient. FINRA notes that the exception for personal gifts does not apply to gifts given for events that occur frequently, or even annually, such as birthdays.

Second, Rule 3220.04 states that in determining whether a gift is ‘‘personal in nature and not in relation to the business of the employer of the recipient,” members should consider a number of factors, including the nature of any pre-existing personal or family relationship between the person giving the gift and the recipient and whether the associated person paid for the gift.

Third, Rule 3220.04 states that when a member bears the cost of a gift, either directly or by reimbursing an associated person, FINRA will presume the gift is not personal in nature and instead is in relation to the business of the employer of the recipient. 

To rely on this exception for personal gifts, firms should ensure that their associated persons do not use firm credit cards and are not otherwise reimbursed for such gifts.

Rule 3220.06 (De minimis Gifts and Promotional or Commemorative Items)

Rule 3220.06(a) codifies existing FINRA guidance21 which provides that gifts of a de minimis value (e.g., pens, notepads, or modest desk ornaments) and promotional items of nominal value that display the member’s logo (e.g., umbrellas, tote bags, or shirts) are not subject to the recordkeeping requirements in FINRA Rule 3220(c), as long as the value of the gift or promotional item is ‘‘substantially below’’ the $300 limit.

Despite commenters asking FINRA to clarify what “substantially below” means in practice, FINRA declined to do so. FINRA did note that expensive leather luggage and crystal pieces, notwithstanding the presence of a firm logo, would not be eligible for the exclusion of promotional items of nominal value. However, this leaves firms uncertain on how this exception applies in practice.

Rule 3220.06(b) also codifies existing FINRA guidance22 and provides that commemorative items (i.e., customary and reasonable solely decorative items commemorating a business transaction) are not subject to the $300 gift limit or the recordkeeping requirements in FINRA Rule 3220(c).

As with prior FINRA guidance, this exception does not explicitly limit the value of customary commemorative items given that they must be solely decorative. However, an item that is not solely decorative would be subject to the $300 limit. FINRA noted that providing employees of an institutional customer with elaborate electronic equipment following the closing of a transaction would not fall within the commemorative item exception and would therefore be subject to the $300 limit.

Rule 3220.05 (Bereavement Gifts)

Rule 3220.05 codifies existing FINRA guidance23 that provides that reasonable and customary bereavement gifts (e.g., appropriate flowers or food platter for the mourners) sent on behalf of a member or its associated persons to acknowledge the death of an employee of a client, or a member of such employee’s immediate family, are not considered to be "in relation to the business of the employer of the recipient" and, therefore, are not subject to the gift limit restrictions in FINRA Rule 3220(a) or the recordkeeping requirements in FINRA Rule 3220(c). 

Rule 3220.07 (Donations Due to Federally Declared Major Disasters)

Consistent with existing FINRA guidance related to donations related to federally declared major disasters,24 Rule 3220.07 codifies an exception from the $300 limit and recordkeeping requirement in FINRA Rule 3220(c) for donations by a member or an associated person to any person, principal, proprietor, employee, agent, or representative of another person to provide assistance to the individual for losses sustained in a natural event that the President of the United States has declared to be a major disaster, such as a wildfire, hurricane, tornado, earthquake, or flood.

Implementation and Supervision Guidance

Rule 3220.02 (Valuation of Gifts)

Under prior FINRA guidance, firms were required to value gifts (other than tickets for sporting or other events) at the higher of cost or market value exclusive of tax and delivery charges and tickets were to be valued at the higher of cost or face value.25

Rule 3220.02 codifies the guidance with respect to tickets but provides that other gifts must be valued at cost, exclusive of tax and delivery charges. This greatly simplifies the recordkeeping requirements for broker-dealers that often struggled with determining the fair market value of certain items.

Rule 3220.02 also codifies prior FINRA guidance for gifts given to multiple recipients. For such gifts, members must record the names of each recipient and calculate and record the value of the gift on a pro rata, per-recipient basis for purposes of complying with the $300 gift limit.

Rule 3220.03 (Aggregation of Gifts)

Rule 3220.03 also codifies current FINRA guidance,26 which provides that a member must:

  1. aggregate all gifts given by the member and its associated persons to a particular recipient over the course of a year when assessing compliance with the gift limit; and
  2. state in its procedures whether it is aggregating all gifts given by the member and its associated persons on a calendar year, fiscal year, or on a rolling basis beginning with the first gift to any particular recipient.

Rule 3220.03 also notes that such aggregation requirements would not apply to personal gifts under Rule 3220.04 or to gifts of de minimis value or promotional or commemorative items under Rule 3220.06.

Rule 3220.08 (Supervision and Recordkeeping)

Consistent with prior FINRA guidance, Rule 3220.08 reminds broker-dealers that FINRA Rule 3110 requires them to have a supervisory system reasonably designed to achieve compliance with FINRA Rule 3220. It also requires firms to have systems and procedures reasonably designed to ensure that payments and gratuities in relation to the business of the recipient’s employer given by the member and its associated persons to employees of another person are:

  1. reported to the member;
  2. reviewed for compliance with FINRA Rule 3220; and
  3. maintained in the member’s records.

Rule 3220.08 also requires that such procedures are reasonably designed to ensure that an associated person who is giving a payment or gratuity is not responsible for determining whether such payment or gratuity is in relation to the business of the recipient’s employer and thus subject to the $300 limit. FINRA states that requiring a person other than the associated person giving the gift to assess the nature of the gift would encourage objectivity in making such determinations.

Interplay with Other Gift Rules

Notwithstanding this amendment, and FINRA’s raising of permissible gift limits, broker-dealers should consider gift limits pursuant to other regulatory regimes. For example, many states, localities and agencies have laws, regulations, and policies restricting broker-dealers and others soliciting business from providing gifts to certain state and local government officials.27 These restrictions are particularly relevant to broker-dealers soliciting state and local pension plans to invest in funds or become advisory clients of an investment adviser. Firms should also note that the gift restrictions under the Employee Retirement Income Security Act of 1974 (“ERISA”) remain unchanged.28

Action Items for Broker-Dealers and Investment Advisers

In light of the amendment and related changes, broker-dealers should update their written supervisory procedures (“WSPs”) to ensure that their associated persons comply with the amended Gifts Rule and Non-Cash Compensation Rules.

Additionally, investment advisers may wish to review their compliance manuals and make corresponding updates to the extent that the Gifts Rule is referenced or otherwise mirrored by the adviser.

Footnotes

  1. Order Approving a Proposed Rule Change, as modified by Amendment No. 1, to Amend FINRA Rule 3220 (Influencing or Rewarding Employees of Others), Exchange Act Release No. 104830 (Feb. 12, 2026) (the “Release”).
  2. These “Non-Cash Compensation Rules” include FINRA Rule 2310 (Direct Participation Programs), FINRA Rule 2320 (Variable Contracts of an Insurance Company), FINRA Rule 2341 (Investment Company Securities), and FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements).
  3. FINRA notes that the rule change impacts members that have elected to be treated as capital acquisition brokers (“CABs”), given that the CAB Rules incorporate FINRA Rule 3220 by reference. See CAB Rule 322 (Influencing or Rewarding Employees of Others).
  4. See FINRA Rule 3220 (Influencing or Rewarding Employees of Others).
  5. Non-cash compensation" is typically defined broadly to mean any form of compensation received in connection with the sale and distribution of securities that is not cash compensation, including but not limited to merchandise, gifts and prizes, travel expenses, meals and lodging.
  6. See FINRA Rule 2310 (Direct Participation Programs).
  7. See FINRA Rule 2320 (Variable Contracts of an Insurance Company).
  8. See FINRA Rule 2341 (Investment Company Securities).
  9. See FINRA Rule 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements).
  10. See NASD Notice to Members 06-69 (Dec. 2006) (“NTM 06-69”), available at https://www.finra.org/rules-guidance/notices/06-69.
  11. Id.
  12. Id.
  13. Id.
  14. See Letter from Gary L. Goldsholle, Vice President & Associate General Counsel, FINRA, to Amal Aly, Managing Director & Associate General Counsel, SIFMA, dated December 17, 2007 (“Aly Letter”), available at https://www.finra.org/rules-guidance/guidance/interpretive-letters/amal-aly-sifma-reasonable-and-customary-bereavement-gifts.
  15. See NTM 06-69.
  16. Gifts/Business Entertainment/Non-Cash Compensation FAQs, available at https://www.finra.org/rules-guidance/key-topics/gifts-gratuities-and-non-cashcompensation/faqs (the “FAQs”).
  17. See NTM 06-69.
  18. FINRA defines “Institutional Customer” in this context as a “institutional customer, vendor or counterparty.”
  19. See letter from R. Clark Hooper, Executive Vice President, NASD, to Henry H. Hopkins, Director, and Sarah McCafferty, Vice President, T. Rowe Price Investment Services, Inc., dated June 10, 1999 (“1999 letter”).
  20. See NTM 06-69.
  21. See NTM 06-69.
  22. See NTM 06-69.
  23. See the Aly Letter.
  24. See the FAQs.
  25. See NTM 06-69. For example, if a member makes a gift of a ticket to a sporting event that it procured in the secondary market at a cost that exceeds the ticket’s face value, the value of such ticket for purposes of the Gifts Rule would be the actual cost to the member, not the face value of the ticket.
  26. See NTM 06-69.
  27. See, e.g., State Gift Laws, National Association of Attorneys General, available at https://www.naag.org/state-gift-laws/.
  28. Note that for ERISA purposes, the proscription is on a potentially broader universe: “nonmonetary compensation” of which gifts and entertainment is a subset. The Department of Labor has issued both enforcement guidance on the subject as well as disclosure requirements under each of Section 408(b)(2) of ERISA and Schedule C of DOL Form 5500—along with “FAQs,” – which in some cases have been argued not to be entirely consistent. More fundamentally, note that Section 406(b)(3) of ERISA outright prohibits a fiduciary with respect to a plan from receiving “any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.”  Case law has illustrated the fact that there need be no showing that the receipt of gratuities actually influenced the fiduciary or adversely impacted the plan, and that there is no de minimis exception. Notwithstanding the foregoing, as mentioned above, the DOL has promulgated limited guidance on enforcement and the reporting of nonmonetary compensation, and each has its own de minimis standards. Note also that not only is the receiver penalized, but that ERISA also proscribes parties from knowingly participating in another’s fiduciary breach. See also, 18 USC § 1954 — which is a separate criminal statute apart from ERISA — with the potential three years of prison time. See, e.g., Steven W. Rabitz, “ERISA Update: Preparing for New DOL Requirements for Gifts and Entertainment,” Complinet, (Nov. 16, 2019); W. Iris Barber, Joyce Mader and Steven W. Rabitz, “Gifts and Entertainment: Will the Holidays Cause Problems for Your ERISA Clients,” ABA JEBC, (Jan. 2009).