Clifford J. Alexander, Partner, Investment Management
David Dickstein, Partner, Investment Management
Michael J. King, Partner, Broker-Dealer, Securities Enforcement
Beth R. Kramer, Partner, Investment Management
DC-1245449 v. 6
We ask that you hold your questions for the presenters till
the end of the program when we will have a Q&A session.
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First Scenario – Gifts in General
ƒ Marketing for a fund distributor is hosting a
conference for broker-dealer representatives to
promote some new funds. During the conference,
they want to give away five digital cameras as door
prizes. Each camera costs about $200. Is this ok?
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First Scenario – Variation
ƒ What if the Marketing Group for an investment
adviser sponsor of hedge funds wanted to use the
cameras as door prizes at a conference and the
attendees were investment adviser representatives
of other IAs?
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First Scenario – Variation
ƒ What if the cameras can be customized to put the
firm’s logo on them?
ƒ Any change in your advice for either the brokerdealer or investment adviser sponsored
conferences?
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Second Scenario – Certain Recipients of Gifts
ƒ What if a registered representative wanted to give a
a gift of a painting worth $500 to a private banking
client. Is this allowed?
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Second Scenario – Variation
ƒ What if the painting was given by an investment
adviser representative of a subadviser to:
ƒ An administrator of an ERISA plan?
ƒ An administrator of a non-ERISA pension plan?
ƒ Does the answer change if the painting was worth
only $200?
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Third Scenario – Receipt of Gifts
ƒ A salesperson in the private client group of a bank
who was also registered with an affiliated brokerdealer firm receives a painting worth $500 from a
private client as a holiday present. Can he keep it?
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Fourth Scenario – Personal Gifts
ƒ Several registered representatives are attending the
wedding of a former colleague who works at
another financial services firm. Each expects to
give a gift worth more than $100. Any issues?
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Fifth Scenario – Bereavement Gifts
ƒ The spouse of a financial adviser has died and an
employee of a broker-dealer wants to send a
bouquet of flowers that will cost over $100. Any
problems?
ƒ What if it was an employee of investment adviser?
ƒ What if the recipient of the flowers was an ERISA
fiduciary?
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Sixth Scenario – Gift Cards
ƒ A wholesaler wants to send $75 gift cards to the
secretary of the manager of each branch she visits
in recognition of his or her assistance in setting up
the visits. The gift cards may be used to purchase
merchandise or redeemed for cash. Ok?
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Seventh Scenario – Business Entertainment in
General
ƒ BD salesperson takes two investment adviser
representatives out to dinner. Together they run up
a $1,200 dinner tab. According to the rep, the
amount attributable to each IA rep is $500. The
supervisor who receives the expense report calls
the compliance officer who calls you for advice.
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Seventh Scenario – Variation
ƒ What if the Seventh Scenario involved a
representative of a subadviser taking employees of
an adviser to dinner?
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Eighth Scenario – Recordkeeping
ƒ Compliance officer calls and says his firm has 3
tickets to the World Series. The face value of each
ticket is $200, but the firm paid $300 each. A firm
supervisor wants to take out the branch managers
of two unaffiliated BDs. Other reps at the firm have
already provided each of these branch managers
with $800 worth of entertainment earlier this year.
What do you say?
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Ninth Scenario – IC/VA Training and
Educational Events
ƒ A wholesaler hosts a seminar attended by advisers.
After the training day, the wholesaler wants to
bring an adviser to a meal at an offsite location (i.e.
a restaurant close to the training facility). Is this
acceptable? Would the fact that the event took
place in the wholesaler’s offices versus another
facility have any bearing?
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Tenth Scenario – Support for Client Seminars
ƒ A wholesaler pays to help support a seminar held
by an adviser for the adviser’s clients. The event
takes place at a restaurant in a separate room, and
the wholesaler rep is given 30 minutes to speak. Is
this a valid training and educational event?
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Eleventh Scenario – Marketing Support
ƒ An FA has won an award as being one of the top
FAs in his firm. He asks a wholesaler for some
money for recognition plaques. Is this allowed?
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Twelfth Scenario – Client Appreciation
Events
ƒ Rep at a broker-dealer asks a fund sponsor for
support for a client appreciation dinner. Ok/not
Ok?
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Thirteenth Scenario – Audience to Answer
ƒ A wholesaler has a ski chalet in Vermont and wants
to offer it to friends, family, colleagues and business
associates at a discount. Ok/not ok?
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Question & Answer Session
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Panelists
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Michael J. King
Partner
Washington DC
202.778.9214
michael.king@klgates.com
Mr. King focuses his practice on U.S. securities regulation of U.S. and foreign financial institutions,
including broker-dealers, investment advisers/managers, banks, investment companies and hedge
funds. He has represented publicly-held companies, financial institutions and individuals in a broad
range of regulatory and enforcement matters before the Securities and Exchange Commission (SEC),
New York Stock Exchange (NYSE), NASD (now FINRA) and state financial regulators.
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Clifford J. Alexander
Partner
Washington DC
202.778.9068
clifford.alexander@klgates.com
Mr. Alexander concentrates in banking, investment company, broker-dealer and investment adviser
law. He currently serves as General Counsel to the National Society of Compliance Professionals, an
association of investment adviser and broker-dealer compliance officers.
Mr. Alexander has had a varied financial practice that includes the organization of four national
banks as limited purpose trust companies and the representation of numerous state and federally
chartered banks on their trust, investment management and securities activities. His legal experience
also has included representation of large and small foreign financial firms establishing branches and
affiliates in the U.S., and U.S. banks establishing offices and affiliates in other countries.
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Beth R. Kramer
Partner
New York
212.536.4024
beth.kramer@klgates.com
Ms. Kramer has substantial experience in the investment management and securities field. She
regularly advises registered investment companies, investment advisers, private domestic and
offshore investment funds and financial institutions on structuring, organization, distribution,
compliance and other regulatory issues.
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David Dickstein
Partner
New York
212.536.3978
david.dickstein@klgates.com
Mr. Dickstein is a partner in the New York office and is a member of the Investment Management,
Broker-Dealer and Securities Enforcement practice groups. Mr. Dickstein provides ongoing advice
to financial institutions (brokers-dealers, registered investment advisers, investment companies and
hedge funds) in a variety of regulatory and compliance matters. These matters include the operation
of investment advisers, broker-dealers, hedge funds and registered investment companies, the
structuring of new products, assisting clients undergoing SEC investigations and examinations, and
obtaining exemptive relief from various federal securities laws. Mr. Dickstein also conducts
compliance audits and regulatory reviews of investment advisers and broker-dealers.
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