The amended Gifts Rule marks the first adjustment since 1992 and codifies longstanding guidance on gift valuation, aggregation, and exclusions with minor adjustments.
By Stephen P. Wink, Gail Neely, Naim Culhaci, Haoyu Gu, and Deric Behar
Link to Key Points: Key Points:
- The new rule increases the annual per-person gift limit from $100 to $300.
- Firms must maintain a supervisory system for gifts pursuant to which, among other things, associated persons may not self-determine whether their gifts fall outside the rule’s scope.
- The new rule largely codifies FINRA’s historical guidance regarding gifts but does not codify its 1999 interpretive letter establishing a carveout for “ordinary and usual business entertainment.”
Link to Introduction Introduction
On February 12, 2026, the Securities and Exchange Commission (the SEC) issued an order approving the Financial Industry Regulatory Authority’s (FINRA) May 29, 2025, proposal (the Proposal) to amend FINRA Rule 3220 (the Gifts Rule), tripling the annual gift limit from $100 to $300 per person per year, and codifying various strands of previously issued interpretive guidance pertaining to the Gifts Rule. Subsequently, on February 27, 2026, FINRA adopted the amended Gifts Rule and established March 30, 2026, as its effective date.
The Proposal originally suggested a $250 limit, but in response to industry feedback, FINRA increased the limit to $300. FINRA stated in the Proposal that the increased $300 cap is intended to account for inflation since 1992 and to accommodate for anticipated inflation (through approximately 2035), reducing the need for potential near-term amendments.
Industry commenters had advocated for a $500 limit to account for future inflation, but FINRA and the SEC declined to raise it to that level. However, FINRA has committed to periodic reviews of the gift limit “to determine if additional modifications are needed to reflect changing economic conditions.”
Link to Codifying FINRA Guidance Codifying FINRA Guidance
The amended Gifts Rule largely consolidates and codifies FINRA staff guidance regarding the Gifts Rule (both existing and new) into Supplementary Material, including the following:
- Gifts incidental to a business entertainment event: As a general matter, gifts given during the course of a business entertainment event are subject to the limits provided in the amended Gifts Rule with certain exceptions, including personal gifts of de minimis value, promotional or commemorative items, and bereavement gifts (see Carveouts from the Gift Rule below). FINRA, however, declined to elaborate on the treatment of such events themselves (although is open to considering future guidance) and noted that the current guidance on business entertainment and non-cash compensation continue to apply.
- Valuation of gifts: Gifts (other than tickets for sporting or other events) must be valued at cost, exclusive of tax and delivery charges. The amended Gifts Rule actually diverges from prior FINRA guidance by eliminating the prior “higher of cost or market value” standard for all gifts that potentially introduced complexity and subjectivity into compliance determinations. However, consistent with historical guidance, tickets for sporting or other events must be valued at the “higher of cost or face value,” as tickets for these events “are commonly purchased on secondary markets at a cost that is different from the face value and the face value of such tickets is typically readily determinable.”
- Aggregation of gifts: To help deter circumvention of the $300 annual gift limit by giving multiple gifts below the threshold in a year to the same recipient, firms must aggregate all gifts from the firm and its associated persons to a particular recipient over the course of a year. Firms must specify in their procedures whether they track aggregation on a calendar year, fiscal year, or rolling basis beginning with the first gift to any particular recipient. The aggregation requirement would not, however, apply if the gift is a personal gift, of de minimis value, or a promotional or commemorative item.
- Carveouts from the Amended Gifts Rule:
- Personal gifts for infrequent life events (e.g., weddings, births, etc.) are excluded from the gift limit, provided they are “customary and reasonable, personal in nature, and not in relation to the business of the employer of the recipient.” However, any gift for which a firm bears the cost (either directly or by reimbursing an associated person), is still considered by FINRA to not be personal in nature and instead in relation to the business of the employer of the recipient, and thus subject to the amended Gifts Rule.
- Bereavement gifts are excluded from the amended Gifts Rule, with FINRA clarifying that reasonable condolence gestures are not subject to the gift limit regardless of whether the firm bears the cost. In such cases, FINRA’s position is that gifts typically do not create the types of improper incentives that the Gifts Rule seeks to address.
- De minimis items and promotional items of nominal value displaying the firm’s logo are excluded, provided their value is “substantially below” the $300 threshold. Solely decorative items commemorating a business transaction, provided they are “customary and reasonable,” are also not subject to the limits of the amended Gifts Rule.
- Donations to individuals for losses sustained in Federally declared major disasters are not considered “in relation to the business of the employer of the recipient” and are therefore excluded from the amended Gifts Rule, codifying guidance first issued by FINRA in 2020.
- The amended Gifts Rule would make clear that it does not apply to gifts from a firm to its own associated persons, or to gifts from firm or an associated person to individual retail customers. FINRA, has clarified, however that firms may choose to implement policies and procedures that restrict or prohibit gifts to individual retail customers.
Link to FINRA Exemptive Authority FINRA Exemptive Authority
The amended Gifts Rule grants FINRA explicit authority to provide conditional or unconditional exemptions from the Gifts Rule, pursuant to the Rule 9600 Series (Procedures for Exemption). FINRA emphasized that its member firms vary significantly in size, structure, business, and distribution models, and that case-by-case relief from the Gifts Rule may be appropriate. The Gifts Rule previously lacked the flexibility to account for unique factual circumstances. FINRA has committed to further discussion of the potential application of this exemptive authority after the approval of the amended Gifts Rule.
Link to Supervision and Recordkeeping Supervision and Recordkeeping
The amended Gifts Rule expressly requires firms to maintain supervisory systems “reasonably designed to ensure compliance with the Gifts Rule,” with procedures and systems in place to report, review, and record gifts. Such procedures must be 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.” Firms are not, however, required to maintain records for gifts that fall under any of the Gift Rule’s exclusions (as described above).
Link to Conforming Amendments Conforming Amendments
The $300 limit extends to gift limits contained in the non-cash compensation provisions in other FINRA rules governing direct participation programs, variable insurance contracts, investment company securities, and public offerings, promoting consistency and compliance for members subject to multiple regulatory frameworks.
Link to Practical Implications and Takeaways Practical Implications and Takeaways
According to the Order, the amendments are “reasonably designed to focus member compliance on the types of gifts that FINRA believes are more likely to be associated with the improprieties and improper incentives that the Gifts Rule is designed to address.”
The amended Gifts Rule is a long overdue inflation adjustment, and for most broker-dealers, the compliance ramifications will be modest. Despite this, FINRA’s core objective remains the same: preventing unethical behavior such as conflicts of interest, bribery, and improper influence in business relationships.
FINRA’s 2016 proposed amendments to the Gifts Rule (which were not adopted) would also have adopted a “business entertainment” rule and provided more specific parameters in furtherance of its 1999 interpretive letter, which states that “ordinary and usual business entertainment” (such as an occasional meal, sporting event, theater production or comparable entertainment event should not count as a gift so long as the entertainment “is neither so frequent nor so extensive as to raise any question of propriety.” While the amended Gifts Rule addresses the specific topic of gifts given during business entertainment, it does not propose parameters or guidelines regarding the scope of the entertainment itself and thus leaves the 1999 interpretive letter as the controlling guidance on this point.