A mutual fund sponsor wants to hold a sales contest to promote sales during the typically slow month of January. The terms of th

Question

3 years ago

12

A mutual fund sponsor wants to hold a sales contest to promote sales during the typically slow month of January. The terms of th

e contest are that the salesperson in the fund selling group that sells the most of the sponsor's funds during the month of January will get the keys to a new Mercedes sports car. Under FINRA rules, this is an example of
(A) a gift and is permitted
(B) a gift and is prohibited
(C) non-cash compensation and is permitted
(D) non-cash compensation and is prohibited

Business

1 answer:

Valentin [98] · Answer 1 · 2022-04-15T21:08:25+03:00

Answer: Under FINRA rules, this is an example of<em><u> non-cash compensation and is prohibited.</u></em>

FINRA forbids enrolled individuals from accepting a acquisition in the sum of more than $100, and also forbids representatives from accepting "non-cash compensation".

The mutual fund sponsor is not the employer of the registered representative - the representative is an employee of the broker-dealer who is in the mutual fund selling group. The benefactor is not permitted to hold such contest - only the employing organizations can hold such contest, provided that it cannot favor the sale of one fund over another. This is an example of "non-cash compensation" under FINRA rules and is prohibited.