Last Christmas I gave my daughter two tickets to a play. To one of my sons I gave a book. In February I told another son to take his girlfriend to a nice restaurant for Valentine’s Day and I’d pay for it. Which was a gift?
If I worked for a NASD member firm, only the book would be considered a gift and, thus, subject to a $100 limitation. The play tickets and the meal would be considered entertainment and, as long as the tickets or the meal were not given ‘so frequently’, they would be allowed by the NASD, even if they cost $1000 each.
Of course, all three were gifts, different kinds of gifts, but, in the real world, gifts. However, in the world of high finance, giving entertainment was not a gift.
The distinction was really played on by the Jeffries Group in trying to win business from Fidelity Investments. They hired someone, Kevin Quinn, who had ties to Fidelity’s traders. Quinn was successful in getting more business from Fidelity; he moved the company from 50th to 15th in terms of the commissions Fidelity paid to brokers. He was helped in doing so by having a $1,500,000 annual expense account reserved solely for seducing Fidelity traders. Now, that the SEC is investigating these payments to Fidelity people, Jeffries is trying to put all the blame on Quinn, ignoring the fact that they gave Quinn the money to break the law.
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