FINRA’s New $300 Gift Limit | Deane Armstrong Insights
Vigilant Insights
Introduction
The SEC has approved revisions to FINRA’s Rule 3220, increasing the annual gift limit for member Firms and their associated persons.
For the first time since 1992, the annual per-person gift limit will rise from $100 to $300. The change reflects decades of inflation and industry feedback, while maintaining guardrails intended to prevent excessive or improper business influence.
In addition to increasing the monetary cap, the amended Rule provides FINRA with authority to grant conditional or unconditional exemptions and codifies prior guidance on a range of gifting scenarios.
Vigilant Director, H. Deane Armstrong, CRCP, provided his thoughts and insights on Financial Advisor IQ and our takeaways from that can be found below.
Key Highlights from the Rule Amendment
- Gift Limit Increased to $300: Up from $100, where it has remained since 1992.
- Inflation-Based Rationale: FINRA originally proposed $250 but raised it to $300 following industry feedback.
- On-Going Review Commitment: FINRA indicated it will periodically reassess the limit based on changing economic conditions.
- Exemptive Authority Added: FINRA may grant exemptions where consistent with investor protection and the public interest.
- Guidance Codified: The Rule now formally incorporates prior guidance on business entertainment, ticket valuation, personal gifts, disaster-related donations, and bereavement gifts.
Bereavement gifts, when customary and reasonable, are now explicitly excluded from the gift-limit restrictions because they are not typically viewed as creating improper incentives.
FINRA will announce the Rule’s effective date in a future regulatory notice.
Deane Armstrong Insights
Deane views the Rule change as a practical adjustment rather than a material shift in compliance expectations. While the increased $300 threshold better reflects today’s costs and reduces the likelihood of inadvertently exceeding the limit, he notes that Firms should not expect a lighter compliance burden.
Deane emphasizes that many Firms already manage risk by prohibiting gifting altogether. For those that continue to allow gifts, the higher limit may provide additional flexibility, but it does not eliminate the need for disciplined oversight. Firms must still maintain accurate tracking systems, conduct supervisory reviews, and ensure ongoing adherence to internal policies.
In short, although the dollar cap has increased, the core compliance framework surrounding gift monitoring and review remains unchanged.
Vigilant’s Conclusion
The increase to a $300 annual gift limit modernizes Rule 3220 and aligns it more closely with current economic realities. However, Firms should not interpret the change as a relaxation of compliance standards.
Supervisory procedures, tracking mechanisms, and review processes remain essential. The addition of FINRA’s exemptive authority and the formal incorporation of prior guidance also underscore the importance of understanding how the Rule applies in nuanced situations.
As regulatory expectations continue to evolve, Firms should review and update their gift and entertainment policies to ensure alignment with the amended Rule and prepare for the forthcoming effective date announcement.