Supervision working life

Continuing education

Every registered representative and principal must complete two forms of continuing education each year: the Firm Element and the Regulatory Element. Their deadlines are phrased a little differently.

Firm element

This is taken at the office each year. By law, it must be completed annually. This is created by your firm, by lawyers, about the updates most affecting your business, your member firm, from new rules, regulations, and laws. It is generally a video, that must be watched in a verified way. Usually this is done at the office, after Covid era however, other ways have been devised. This is not a video you can put on play, and then step away, and come back, click some buttons and get credit.

The firm decides what the Firm Element covers. At least once a year it must evaluate its training needs and write a training plan that considers its size, structure, business, regulatory developments, and how its people did on the Regulatory Element, and it adds supervisory training when that evaluation shows supervisors need it (FINRA Rule 1240(b)). The annual compliance meeting can count toward it. New products are a main source of training needs: FINRA expects a firm to vet a new product before offering it, decide whether representatives and their supervisors need training on it, and allow only trained representatives to sell it (Notice to Members 05-26).

Regulatory element

This is computer-based training created by FINRA, that must be completed by December 31st. It is completed for each registration category a person holds, so a principal who also holds a representative registration completes the content for both. It is still one form of continuing education, the Regulatory Element, not a third. It is still completed annually, but the law says by December 31, not end of the year, or annually like the firm element. If it isn’t completed by the deadline, the registration becomes CE inactive, and is administratively terminated if it stays inactive for 2 consecutive years. Unlike the firm element that is created by your firm, and therefore will be given usually near the end of the year, the regulatory element could be taken anytime before December 31st each year, so can easily be taken at the very beginning of the year to get it out of the way.

Maintaining qualification following termination

The Maintaining qualifications program (MQP) allows people who leave a company to maintain their representative and/or principal qualifications for up to 5 years, so they can re-register without retaking the exam. They must pay a $100 annual fee and complete the annual CE requirements while enrolled.

There are 5 criteria that the person must meet to qualify. These apply to each registration category. They are:

1. The person must have been registered in the category for at least one year prior to the termination of the category, and not subject to a statutory disqualification
2. The person has to elect to participate in the continuing education program under this rule at the time of their U5 submission or within 2 years of the termination of the registration category.
3. The person completes by December 31 of each year, in a manner specified by FINRA, all CE during their participation in this program.
4. The person has no Regulatory Element CE deficiency lasting 2 consecutive years, either when electing to participate or while in the program.
5. The person does not become subject to a statutory disqualification during participation in the program.

Influencing or rewarding employees of other firms (gift limit)

There can be some very subtle differences between being happy with someone and rewarding them, wanting someone to think well of you and your business, and providing them a keepsake, or just underhanded bribery, extortion, and blackmail.

Gift limits

Companies often give gifts to employees of other companies. There could be many reasons for this, the vast majority, and certainly all your company does, are legal, but reasons why underhanded and dirty companies would do this is why there are limitations and rules in giving gifts. To be clear, this rule in no way implies limits to how much your firm, or any firm, can pay that firms employees or partners. This is just “influencing employees of other member firms”

Under FINRA Rule 3220, gifts cannot be in excess of $300 (as of 2026) per person per year. If a firm has 100 representatives, another firm could send each of them a $50 gift; it is not combined, it is individual agent/representative basis. This could be a gift certificate.

Event gifts, like a wedding, birth of a child, something like that, don’t count. These are rare events, and the representative does need to be careful. The gift still has to be customary and reasonable, personal in nature, and not in relation to the business of the recipient’s employer. If a rep usually sends a contact at another firm a modest holiday gift, and that contact is getting married, suddenly upgrading to a lavish, expensive wedding gift would not qualify.

Promotional items are treated differently. A gift of de minimis value, like a pen, notepad, or modest desk ornament, or a promotional item of nominal value that displays the giving firm’s logo, like an umbrella, tote bag, or shirt, doesn’t count toward the $300 limit. The value has to be substantially below $300, though, and a logo doesn’t change that. If ABC Money Managers sends the top 20 reps at MNO Broker Dealer $500 leather jackets with its logo burned in, each jacket is a gift, and it’s over the limit.

Business entertainment is also treated differently. When a rep personally hosts a contact from another firm at an occasional meal, game, or show, that isn’t a gift under Rule 3220, as long as it isn’t so frequent or so lavish that it raises a question of propriety. Tickets the rep hands over without going along are a gift: they’re valued at the higher of cost or face value, and every gift to the same person during the year is added together against the $300 limit.

Bets with employees of other firms are generally not allowed, because paying off a lost bet gives the winner something of value. A few dollars on a golf putt is de minimis and won’t draw attention, and like any de minimis gift it isn’t added to the year’s total. A larger bet is, and it could easily be thrown to disguise a payment.

All of this is well and good, but intention and purpose still matter. If someone technically follows the rules, but is doing it for nefarious reasons, it would not be allowable. Included in the unethical intentions would include trying to manipulate markets or media to print or do things in the violator’s benefit.

Under MSRB Rule G-20, a separate rule from FINRA Rule 3220 above that applies specifically to municipal securities activity, a regulated entity engaging in municipal securities activities for or on behalf of a municipal entity in connection to an offering, is prohibited from getting reimbursed from the proceeds of the offering for the costs of entertaining anyone, including officials or other personnel of the municipal entity. Ordinary and reasonable meals the firm hosts that are directly related to the offering are not treated as entertainment for this purpose.

Non-cash compensation from product sponsors

The sales rules for investment company shares (FINRA Rule 2341), variable contracts (Rule 2320), direct participation programs (Rule 2310), and public offerings (Rule 5110) limit the non-cash compensation a firm and its people may accept from an offeror, the company whose product they sell. Only these arrangements are allowed:

• Gifts of no more than $300 per person per year, not preconditioned on a sales target. The limit rose from $100 on March 30, 2026, along with the Rule 3220 limit above.
• An occasional meal, ticket to a sporting event or the theater, or comparable entertainment, not so frequent or extensive as to raise a question of propriety and not preconditioned on a sales target.
• Payment for training or education meetings, if the firm approves attendance in advance without tying it to sales, the location suits the meeting (an office of the offeror or the firm, a nearby facility, or a regional location), and no guests’ expenses are paid.
• The firm’s own internal sales contests. For mutual funds and variable contracts, a contest must be based on total production of all the covered products the firm sells, with each one weighted equally, and no unaffiliated offeror may help organize it.

Firms keep records of the compensation their people receive from offerors, other than those gifts and entertainment. For recommendations to retail customers, Regulation Best Interest separately requires eliminating sales contests and non-cash compensation based on sales of specific securities within a limited period.

Positions of trust for customers (fiduciary appointments)

Customers sometimes want to name their representative in their will, or ask the representative to serve as executor, trustee, or holder of a power of attorney. Under FINRA Rule 3241, a registered person must decline being named a customer’s beneficiary, receiving a bequest, or holding any of these positions, unless either:

• The customer is a member of the registered person’s immediate family, defined broadly (parents, grandparents, spouse or domestic partner, siblings, in-laws, children, grandchildren, cousins, aunts, uncles, nieces, nephews, and anyone in the household the person financially supports), or
• The registered person gives the firm written notice and receives its written approval before taking the status or acting in the role.

The firm must assess the risk, including whether the role could compromise the representative’s duties to the customer, and then approve, approve with conditions it supervises, or disapprove, in writing. A representative serving as executor or trustee can earn only the reasonable and customary fees for that role. A “customer” includes anyone with an account assigned to the representative in the last six months, and a representative also can’t ask a customer to name someone else, such as the representative’s spouse or child, instead.