Gifts and Gratuities Practice Questions for the SIE

Answer: $300 per person per year

FINRA Rule 3220 limits business-related gifts to $300 per recipient per year. The figure was raised from the long-standing $100 limit (in place since 1992) effective March 30, 2026, so be careful with older study materials — nearly all of them still say $100. The limit is an annual aggregate, not a per-gift allowance: business-related gifts to the same person are added together over the year against the single $300 cap, so three $150 gifts to one recipient would breach it. Certain gifts sit outside the cap entirely and are not aggregated: promotional items displaying the firm's logo and other items of nominal value, solely decorative items commemorating a business transaction, personal gifts for infrequent life events (a wedding or a new baby, where the gift is customary, reasonable, and genuinely personal rather than tied to the recipient's employer's business), and customary bereavement gifts. Business entertainment is also treated separately from gifts — if the representative attends and hosts, it is entertainment, judged by whether it is so frequent or extensive as to be improper rather than by the $300 cap. And the rule reaches gifts to employees of other firms and other institutional counterparties; it does not govern a firm's gifts to its own associated persons or to individual retail customers. Two things not to confuse with this cap: the $250-per-election de minimis allowance under MSRB Rule G-37 concerns political contributions by municipal finance professionals, not gifts. And MSRB Rule G-20, the parallel gift rule for municipal securities professionals, was separately raised to $300 in 2026 to stay aligned with FINRA.

The Trap: Stale $100 limit from pre-2026 materials

• $100 per person per year: The pre-2026 limit — the classic stale-materials trap. $100 had been the cap since 1992; it was raised to $300 effective March 30, 2026, but virtually all older prep materials still show $100.
• $300 per gift, with no annual aggregation: Misconception that the cap applies gift-by-gift. Rule 3220.03 requires a firm and its associated persons to aggregate the business-related gifts they give to a particular recipient over the year against the single $300 limit, so three $150 gifts to one person would breach it.
• $250 per person per election: Confuses the gift limit with MSRB Rule G-37's $250 de minimis allowance for political contributions by municipal finance professionals — a different rule about political pay-to-play, not gifts.

Verified against: FINRA Rule 3220 (Influencing or Rewarding Employees of Others) and Supplementary Material .01–.09; FINRA Regulatory Notice 26-05 (Feb. 27, 2026), effective March 30, 2026 (SEC Order approving SR-FINRA-2025-003, Rel. No. 34-104830); MSRB Rule G-37 ($250 per-election de minimis); MSRB Rule G-20 (raised to $300, 2026)

Answer: As business entertainment, which is not subject to the $300 gift limit so long as it is neither too frequent nor too extensive

The key distinction is whether the representative is 'in the room.' Under long-standing FINRA guidance, the gifts rule does not prohibit ordinary and usual business entertainment — an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment — provided it is neither so frequent nor so extensive as to raise any question of propriety. Because this representative personally hosts and attends the tournament with the client, the cost of the outing is business entertainment, so the $300 annual gift limit does not apply. There is no fixed dollar cap here, only that reasonableness standard. Had she simply handed over the tickets and not attended, the same tickets would have been a gift counted against the $300 limit (and tickets are valued at the higher of cost or face value). Two points worth pinning down. First, the $300 figure is current but recent: FINRA raised the gift limit from $100 to $300 per person per year effective March 30, 2026, so any study material still citing $100 is out of date. Second, gifts and entertainment can occur at the same event — a tangible gift handed to the client during the outing (say, a set of clubs) is still measured against the $300 limit, even though the outing itself is not. The other choices fail for distinct reasons. The non-cash compensation restrictions target payments to associated persons of other broker-dealers in connection with selling products such as mutual funds, variable contracts, and direct participation programs, and they are especially concerned with rewards preconditioned on hitting sales targets — the client's CIO is not an associated person, and nothing here is tied to production. The personal-gift exclusion is narrow: it covers customary, reasonable gifts for infrequent life events like a wedding or a new baby that are genuinely personal and unrelated to the recipient's job, which a client golf outing plainly is not.

The Trap: Treating hosted entertainment as a capped gift (everything-of-value-is-a-gift misconception)

• As a personal gift excluded from Rule 3220: Mixes up two different carve-outs. The personal-gift exclusion covers customary, reasonable gifts marking infrequent life events — a wedding, the birth of a child — that are personal in nature and unrelated to the recipient's job. The entertainment treatment instead depends on the giver hosting and attending. A client outing is business, not a life event.
• As prohibited non-cash compensation: Confuses hosted entertainment with sales-contingent non-cash compensation. Those rules reach payments to associated persons of other broker-dealers tied to sales of products like mutual funds, variable contracts, and DPPs. A client's chief investment officer is not an associated person of a broker-dealer, and nothing here is preconditioned on a sales target.
• As a gift subject to the $300 annual limit: Misconception that anything of value given to another firm's employee is a capped gift. Because the representative personally hosts and attends the tournament, the outing is business entertainment — FINRA has confirmed that the cost of the entertainment event itself is not counted toward the gift limit. Hand the tickets over and stay home, and it flips to a gift.

Verified against: gift-vs-entertainment 'tickets' misconception pair). Primary: FINRA Rule 3220 and Supplementary Material .01-.09 (as amended eff. 2026-03-30); Regulatory Notice 26-05; SEC Release No. 34-104830 (Feb. 12, 2026), 91 FR 7570 — confirming the cost of a business entertainment event is not included in the gift's value and that existing business-entertainment guidance continues to apply.

Answer: The representative's firm must keep a record of the gift, even though it is under the $300 limit

FINRA Rule 3220 caps business-related gifts to employees of another firm at $300 per recipient per year - a figure raised from $100 effective March 30, 2026, so older study materials and question banks still showing $100 are out of date. Separately, Rule 3220(c) requires the giving member to keep a separate record of gifts 'in any amount known to the member,' and the rule's supervision provisions require that gifts be reported to the firm, reviewed for compliance, and maintained in the firm's records. Staying under $300 is therefore not a reason to skip the record: the limit is an annual aggregate per recipient, and a firm can only police that running total if every gift is logged. So the $150 gift must be recorded by the representative's own firm - the rep reports it to the firm rather than filing anything with FINRA, and the duty sits with the giver's firm, not the recipient's. Note the limits of this: the rule carves a few narrow categories out of both the cap and the recordkeeping duty - personal gifts, bereavement gifts, de minimis or promotional items of nominal value (which must be substantially below $300, such as a logo pen or notepad), commemorative mementos of a business transaction, and donations tied to federally declared major disasters. A $150 business gift falls into none of those, so it is recorded like any other gift subject to the rule.

The Trap: Believing sub-limit gifts need no records (records-only-for-violations misconception)

• Recordkeeping is the responsibility of the recipient's firm, not the giver's: Flips the obligation to the receiving side. Rule 3220(c) places the record-retention duty on the member whose associated person gave the gift. The recipient's firm may well have its own internal policies on accepting gifts, but the recordkeeping duty Rule 3220 imposes falls on the giving firm.
• No record is needed because the gift is within the $300 limit: Misconception that recordkeeping kicks in only once a gift breaks the limit. The $300 cap is an annual aggregate per recipient, so a firm that logged only over-limit gifts could never tell when several smaller gifts cross the line. A $150 business gift sits well within the cap and still must be recorded - and at half the limit it is nowhere near the 'de minimis' carve-out, which requires a value substantially below $300.
• The representative must report the gift directly to FINRA: Misconception about where the obligation runs. Rule 3220's supervision and recordkeeping provisions require that gifts be reported to the representative's own firm, reviewed by the firm for compliance, and maintained in the firm's records. There is no direct gift filing with FINRA.

Verified against: FINRA Rule 3220(c) (separate record of gifts in any amount) and Supplementary Material .06/.08 (de minimis items; supervision and recordkeeping); FINRA Regulatory Notice 26-05 ($300 limit, eff. 2026-03-30)

Answer: Permitted, because gifts given for personal reasons unrelated to the business of the recipient's employer are outside the rule

FINRA Rule 3220 caps gifts at $300 per person per year — but only gifts given 'in relation to the business of the employer of the recipient.' Rule 3220.04 excludes gifts for infrequent life events (a wedding gift, a congratulatory gift for the birth of a child) from both the $300 limit and the rule's recordkeeping requirements, provided the gift is customary and reasonable, personal in nature, and not in relation to the recipient's employer's business. A $450 espresso machine for the wedding of a 15-year friend, paid for by the rep himself, fits — FINRA looks to the pre-existing personal relationship and to whether the associated person paid for the gift. Watch two edges. First, 'personal' is not a magic word: the exclusion requires the gift to be customary and reasonable, so an extravagant gift — or a 'friendship' that is really a business relationship in disguise — would not qualify. Second, if the FIRM pays for the gift or reimburses the rep, FINRA presumes it is NOT personal and is instead business-related, so the rep's own wallet is doing real work in this fact pattern. Related exclusions: bereavement gifts, de minimis and promotional items of nominal value (value must be substantially below $300), and solely decorative items commemorating a business transaction. Option D borrows the attendance test from a different concept: whether the giver attends distinguishes business entertainment from a gift, and the cost of the entertainment event itself is not counted toward the $300 gift limit — though a gift handed over at such an event still is. Attendance has nothing to do with the personal-gift exclusion. One currency note: the limit was $100 for decades and rose to $300 effective March 30, 2026, so older study material will state it wrong.

The Trap: Applying the $300 cap to genuinely personal gifts

• Permitted only if the representative attends the wedding: Misapplies the business-entertainment attendance test to the personal-gift exclusion. Attendance is what separates business entertainment from a gift; a personal gift is excluded because of the genuine personal relationship, whether or not the giver attends the occasion.
• Permitted only if the roommate's employing firm approves it in writing: Invents a recipient-firm approval mechanism that Rule 3220 does not contain for gifts. The echo is real but misplaced: Rule 3220(b) does require the employer's prior written consent — but that provision governs written contracts of employment or for services, not gifts. What takes this gift outside the rule is its personal, non-business character, not anyone's approval.
• A violation, because it exceeds the $300 annual limit: Misconception that the $300 cap applies to every gift given to anyone employed in the industry. The rule — and its $300 limit — reaches only gifts given 'in relation to the business of the employer of the recipient.' Rule 3220.04 takes customary, reasonable personal gifts for infrequent life events outside the limit entirely, so the $450 price tag never comes into play.

Verified against: FINRA Rule 3220 & Supplementary Material .04 (personal gifts), .01 (gifts incidental to business entertainment), .06 (de minimis/promotional/commemorative); FINRA Regulatory Notice 26-05 (adopting amendments, effective 2026-03-30)

Answer: The November gift creates a violation, because gifts to the same recipient aggregate to $330 for the year

FINRA Rule 3220 caps gifts at $300 per person, per year — a limit raised from $100 effective March 30, 2026, so older study materials citing $100 are out of date. The cap is measured per recipient, per year, in the aggregate: Supplementary Material .03 requires a firm to add up every business-related gift that the firm and its associated persons give to the same recipient over the year, and to state in its procedures whether it tracks that year on a calendar-year, fiscal-year, or rolling basis. This firm uses a calendar year, so the $180 basket and the $150 bottle of wine fall in the same tracking year: $180 + $150 = $330, and the second gift takes her over the cap even though neither gift alone exceeds $300. (Gifts are valued at cost, so the stated prices are the figures that count.) This is exactly why firms must log every gift, not just large ones — aggregation can only be policed with a complete record. The entertainment exception is no help here: business entertainment covers an occasional meal, sporting event, or comparable event that the representative hosts and attends, and it must be neither so frequent nor so extensive as to raise a question of propriety. A gift basket or a bottle of wine shipped to the recipient to enjoy alone is a gift, not entertainment.

The Trap: Treating the $300 cap as per-gift rather than an annual per-recipient aggregate

• Both gifts are permissible because each one is below $300: The per-gift misconception. The $300 limit is an annual aggregate per recipient — individual gifts under $300 can still combine to breach it.
• Only the more expensive of the two gifts counts toward the annual limit: A variant of the no-aggregation misconception — assuming only the largest single gift is measured against the cap. Every business-related gift to the recipient counts in full.
• Both gifts qualify as business entertainment because they arise from an ongoing business relationship: Confuses gifts with entertainment. Business entertainment means an occasional meal, sporting event, or comparable event that the representative hosts and attends with the recipient; items shipped for the recipient to enjoy alone are gifts, however business-related the relationship is.

Verified against: FINRA Rule 3220 ("in excess of $300 per individual per year"; amended by SR-FINRA-2025-003, eff. 2026-03-30) with Supplementary Material .02 (valuation at cost) and .03 (aggregation per recipient per year; calendar/fiscal/rolling basis); FINRA Regulatory Notice 26-05 ($100 → $300 increase)

Answer: Within the limit, because gifts are generally valued at their cost to the giver, and $270 does not exceed $300

FINRA Rule 3220 bars giving anything of value over $300 per person per year in relation to the business of the recipient's employer. Rule 3220.02 supplies the valuation standard: gifts are valued at cost to the giver, exclusive of tax and delivery charges — not at the item's retail or market price. The $270 she paid is what counts, the $360 retail figure is a red herring, and the gift fits within the limit. The one exception worth memorizing: tickets to sporting or other events are valued at the higher of cost or face value, because tickets are often bought on secondary markets at prices unrelated to face value. Two changes that took effect March 30, 2026 make this question a trap for anyone studying from older materials, which get both wrong. First, the limit itself rose from $100 to $300. Second — and decisive here — the valuation standard changed: prior FINRA guidance valued gifts at the higher of cost or market value, under which this very gift would have counted as $360 and breached the cap. Cost now controls. Being under the cap is not a recordkeeping exemption. Rule 3220(c) requires the firm to retain a separate record of gifts in any amount, which is how it tracks aggregation of multiple gifts to a single recipient over the year. Only gifts excluded from the rule entirely — personal gifts for infrequent life events, bereavement gifts, de minimis or logo promotional items, solely decorative commemorative items, and donations tied to federally declared disasters — fall outside both the limit and the recordkeeping requirement. One practical note: $270 of the $300 is now used up for this recipient, so any additional gift to her this year that is subject to the limit must cost $30 or less. Gifts in the excluded categories above do not aggregate and would not count against that remaining $30.

The Trap: Valuing gifts at retail/market price instead of the giver's cost — the pre-2026 'higher of cost or market value' standard, superseded March 30, 2026

• Over the limit, because gifts must be measured at their full retail price: The market-value trap. Retail price does not control — Rule 3220.02 values gifts at the giver's cost. This choice mirrors FINRA's pre-2026 guidance, which used the higher of cost or market value and would have made this $360 gift a violation. That standard was superseded when the amended rule took effect March 30, 2026.
• Over the limit, because business-related gifts of merchandise are restricted to items of nominal value: Conflates the de minimis/promotional exclusion with the general rule. Nominal-value items such as logo pens or tote bags fall outside Rule 3220 altogether, but ordinary business gifts are not confined to nominal value — they are permitted up to $300 per recipient per year. A $270 item is in fact far above 'nominal'; FINRA has said gifts valued at or near $300 would not be considered nominal.
• Within the limit, and exempt from the firm's gift records because its value is under $300: Starts true but ends false — the classic partially-correct trap. The gift is within the limit, but coming in under $300 is not a recordkeeping exemption: Rule 3220(c) requires a separate record of gifts in any amount, which is exactly what lets the firm aggregate gifts to one recipient across the year. Only gifts excluded from the rule entirely (personal, bereavement, de minimis/promotional, commemorative, disaster-relief) escape the recordkeeping duty.

Verified against: FINRA Rule 3220(a), (c) and Supplementary Material .02 (Valuation of Gifts), .03 (Aggregation), .06 (De minimis/Promotional), .08 (Supervision and Recordkeeping); FINRA Regulatory Notice 26-05 (Feb. 27, 2026, eff. Mar. 30, 2026)

Answer: A $380 gift that exceeds the $300 annual limit, because the representative will not attend the event

This is the classic 'tickets' fact pattern, and it turns on one question: was the representative in the room? Take the portfolio manager to the game and host him, and the cost of the event itself is business entertainment — FINRA Rule 3220 puts no dollar cap on it, though firms impose their own limits and the entertainment must not become so frequent or lavish as to raise questions about the relationship. Skip the game and simply send the tickets over, and there is no entertainment event at all: the representative has given something of value to an employee of a customer, which is a gift subject to Rule 3220's $300 annual per-recipient limit. (That limit rose from $100 effective March 30, 2026 — expect to see the outdated $100 figure in older study materials.) What controls is whether the representative actually attends and hosts, not what he intended when he bought the tickets. Two further mechanics decide the number. First, valuation: tickets to sporting events are valued at the higher of cost or face value, so buying below face value does not shrink the gift — here cost and face value are the same $190. Second, aggregation: Rule 3220.03 requires the firm to add up all gifts to a particular recipient across the year, so both tickets count against the portfolio manager, reaching $380 and breaching the cap. The promotional-item exclusion is no escape — it covers logo items of nominal value well below $300, not premium event tickets. The compliant alternatives would have been to attend and host, to send a colleague to attend and host in his place, or to send only what fits within the recipient's remaining annual capacity.

The Trap: Treating unattended tickets as entertainment (attendance-test misconception)

• Permissible, because each ticket is individually below the $300 limit: The no-aggregation misconception. FINRA Rule 3220.03 requires a firm to aggregate all gifts given to a particular recipient over the year. Both tickets went to the portfolio manager, so their values combine: $190 + $190 = $380 counted against a single $300 annual cap.
• Excluded from the rule as promotional items: Conflates event tickets with the de minimis and promotional-item exclusion in Rule 3220.06(a), which covers items of nominal value that display the member's logo — pens, notepads, umbrellas, tote bags — and only where the value is substantially below $300. Two $190 playoff tickets are neither nominal nor logo items.
• Business entertainment, because they were originally purchased for an event the representative planned to host: The original-intent misconception. Business entertainment means the associated person personally hosts the customer's employee at the event, not merely that he meant to. The representative never attended, so no business entertainment event took place — only tickets handed to an employee of a customer. What he intended when he bought them does not change the analysis.

Verified against: FINRA Rule 3220(a) and Supplementary Material .01 (Gifts Incidental to Business Entertainment), .02 (Valuation of Gifts — higher of cost or face value for event tickets), .03 (Aggregation of Gifts), .06(a) (De Minimis Gifts and Promotional Items); FINRA Regulatory Notice 26-05 ($300 limit, effective 2026-03-30); take the client = entertainment)

Answer: Prohibited, because a non-cash reward from a product sponsor conditioned on reaching sales targets in specific products is not permitted

FINRA's non-cash compensation rules — which live in the product-specific rules for investment company securities (Rule 2341), variable contracts (Rule 2320), direct participation programs (Rule 2310), and public offerings (Rule 5110) — bar a member or associated person from accepting non-cash compensation from an offeror in connection with the sale of that offeror's products, except through a short list of exceptions. Every one of those exceptions carries the same condition: the payment must not be 'preconditioned on the achievement of a sales target.' A resort trip awarded for crossing $1 million in quarterly sales of one fund family is exactly that preconditioned reward — a representative chasing the trip has an incentive to push the sponsor's funds regardless of whether they suit the customer. Watch the two traps. First, host attendance does not save it. Attendance is what separates business entertainment from a gift under Rule 3220, but the entertainment exception covers only an occasional meal, a sporting event or theater ticket, or comparable entertainment that is neither so frequent nor so extensive as to raise a question of propriety. A weekend resort trip fails that test on its own, and fails again on the sales condition. Second, a small dollar value does not save it. The gift exception — currently $300 per person per year, raised from the long-standing $100 effective March 30, 2026, so expect older materials to still say $100 — applies only to gifts that are not preconditioned on a sales target. Narrow exceptions do exist: occasional meals and entertainment, offeror-paid training or education meetings that satisfy strict approval and location conditions, and a firm's own internal non-cash compensation arrangements based on total production with equal weighting across products. Note that last one carefully — a firm may reward its own people on aggregate production, which is why the prohibition is best remembered as targeting rewards preconditioned on a sales target rather than every reward that touches sales. None of these exceptions lets an offeror reward another firm's representatives for hitting sales targets in the offeror's own funds.

The Trap: Believing host attendance or a small dollar value legitimizes sales-target-conditioned rewards

• Permissible as long as the trip's value is $300 or less per representative: Misapplies the gift accommodation. The gift exception does allow gifts up to the $300 annual per-person limit (raised from the long-standing $100 effective March 30, 2026, so older materials still show $100) — but only when the gift is not preconditioned on achieving a sales target. The sales condition is fatal regardless of value, and a weekend resort trip would exceed $300 anyway.
• Permissible business entertainment, provided the wholesaler attends the trip: Host attendance is the wrong lever. Attendance is what separates business entertainment from a gift under Rule 3220, but the entertainment exception to the non-cash compensation rules reaches only an occasional meal, a sporting event or theater ticket, or comparable entertainment that is neither so frequent nor so extensive as to raise a question of propriety — and it must not be preconditioned on a sales target. An all-expenses-paid weekend resort trip awarded for crossing $1 million in sales fails on both grounds, with or without the wholesaler in attendance.
• Permissible if each representative provides prior written notice to his or her firm: Applies the outside-business-activity framework (FINRA Rule 3270) to the wrong problem. Prior written notice governs a representative's outside business activities; it neither addresses nor authorizes prohibited non-cash compensation from a product sponsor.

Verified against: FINRA Rule 2341(l) (investment company securities — non-cash compensation), with parallel provisions in Rules 2320, 2310, and 5110; FINRA key topic 'Gifts, Gratuities and Non-Cash Compensation' (an offeror may not pay non-cash compensation to another firm's reps based on sales targets in the offeror's products; the gift, entertainment, and training/education exceptions each require that the payment not be preconditioned on achievement of a sales target); FINRA Rule 3220 + Regulatory Notice 26-05 ($300 gift limit eff. 2026-03-30, conforming changes to 2310/2320/2341/5110)

Answer: Contest credit is based on each representative's total production in all investment company securities the firm distributes, with the credit for every such security weighted equally

FINRA Rule 2341(l) starts by barring non-cash compensation connected to the sale of investment company securities, then carves out narrow exceptions. One of them, Rule 2341(l)(5)(D), lets a firm run an internal non-cash arrangement for its own associated persons — but only on strict terms: contest credit must be based on the representative's total production across ALL investment company securities the firm distributes, and the credit for each such security must be equally weighted. Equal weighting is the entire point. If every fund earns the same credit per dollar sold, the contest gives a representative no reason to steer a customer into one fund rather than another. That is why option C is the rule turned inside out: paying extra credit for the firm's most profitable funds rebuilds the exact conflict the condition removes. Option B imports the $300 figure from Rule 3220, which caps business-related gifts to employees of OTHER firms (raised from $100 effective March 30, 2026); a firm compensating its own representatives is governed by the equal-weighting conditions instead — and because a contest prize is by definition conditioned on hitting a sales target, no dollar amount would qualify it as a permissible gift. Option D imports the business-entertainment test, where the representative's attendance is what distinguishes entertainment from a gift; that test has nothing to do with an internal contest. Two boundaries worth carrying into the exam: this total-production and equal-weighting condition lives in Rule 2341 (investment company securities) and Rule 2320 (variable contracts) — the parallel non-cash rules for direct participation programs and public offerings do not impose it. And since June 30, 2020, these arrangements must additionally be consistent with the SEC's Regulation Best Interest, so satisfying the equal-weighting test is necessary but does not by itself make a product-category contest permissible.

The Trap: Applying the $300 Rule 3220 gift cap — or product-weighted credit — to an internal sales contest instead of the total-production/equal-weighting condition; also mistaking equal weighting as running ACROSS product types rather than across each security within the covered category

• Representatives receive extra contest credit for selling the fund families that are most profitable to the firm: This is the mirror image of the rule. Weighting credit toward the firm's most profitable funds — however sensible for firm economics — recreates precisely the product-pushing conflict that the equal-weighting condition exists to eliminate.
• The value of the travel prize does not exceed $300 per representative: Wrong on two independent grounds. The $300 cap is FINRA Rule 3220's limit on business-related gifts to personnel of OTHER firms (raised from $100 effective March 30, 2026) — not a firm's compensation of its own people. And a prize awarded for hitting a sales target fails the gift exception at any dollar value, because that exception requires the gift not be preconditioned on achieving a sales target.
• Each winning representative brings a client along on the trip: Borrows the business-entertainment test. Whether the representative attends and hosts is what separates entertainment from a gift; it plays no role in validating an internal non-cash compensation arrangement.

Verified against: FINRA Rule 2341(l)(5)(D) (investment company securities; parallel provision at Rule 2320(g)(4)(D) for variable contracts — note Rules 2310(c) and 5110(h) impose no total-production/equal-weighting condition). Reg BI consistency requirement added by SR-FINRA-2020-007, approved SEC Release 34-89091 (June 18, 2020), effective June 30, 2020; see Regulatory Notice 20-18. Gift limit: FINRA Rule 3220, $300 effective 2026-03-30.

Answer: A representative's $400 gift to a settlements clerk at a counterparty firm, as thanks for expediting the representative's trades

FINRA Rule 3220 applies to gifts given to the personnel of OTHER firms, vendors, or counterparties when the gift relates to the business of the recipient's employer — like thanking another firm's settlements clerk for handling your trades. That gift is capped at $300 per recipient per year (the limit was raised from $100 effective March 30, 2026), so a $400 gift violates the rule. The other three choices fall outside the rule for different reasons. Two of them are now spelled out in the rule itself: it does not apply to gifts from a firm to its own associated persons (an internal compensation matter), and it does not apply to gifts to individual retail customers — though firms commonly impose their own policies on customer gifts, so a $400 customer gift may still breach firm policy even though Rule 3220 does not reach it. Separately, gifts of de minimis value and promotional items bearing the firm's logo are excluded from the limit and from the rule's recordkeeping requirements as long as their value stays substantially below $300; a $20 logo desk clock is a textbook example. Other exclusions worth knowing: personal gifts for infrequent life events (a wedding gift, a new baby), bereavement gifts, and customary decorative mementos commemorating a business transaction — the last of which are excluded even if they cost more than $300. The tested skill is scope, not just the dollar figure: ask first whether the recipient is another employer's personnel receiving the gift in relation to that employer's business, and only then apply the $300 cap.

The Trap: Misjudging Rule 3220's scope — applying it to own-employee or customer gifts instead of other firms' personnel

• A representative's $400 anniversary gift to a longtime retail customer of the firm: Misconception that customer gifts fall under the $300 cap. Rule 3220 reaches gifts to employees or agents of another person given in relation to that employer's business, and it expressly does not apply to gifts to individual retail customers — a retail customer is not receiving the gift in that capacity. Firms may still impose their own policies restricting or prohibiting customer gifts.
• A $20 desk clock bearing the giving firm's logo, sent to another firm's employee: Misconception that promotional trinkets count toward the cap. Gifts of de minimis value (pens, notepads, modest desk ornaments) and promotional items displaying the firm's logo are not subject to the $300 limit or the rule's recordkeeping requirements, provided their value is substantially below $300 — a $20 logo clock plainly qualifies. And even if it were counted, $20 would not breach a $300 cap.
• A member firm's $500 holiday gift to one of its own registered representatives: Misconception that the rule reaches a firm's own personnel. Rule 3220 expressly does not apply to gifts from a member to its own associated persons — that is an internal compensation matter. The rule addresses gifts to the personnel of other firms.

Verified against: FINRA Rule 3220 (Influencing or Rewarding Employees of Others), incl. Supplementary Material .04–.09; FINRA Regulatory Notice 26-05 (Feb. 27, 2026), effective Mar. 30, 2026