What is the MSRB's stance on non-cash compensation or gifts?

• A. Gifts and gratuities must be prohibited entirely.
• B. Gifts and gratuities must be reasonable and not create a conflict of interest or influence decisions.
• C. Gifts can be lavish if given during holidays.
• D. Gifts must be disclosed to clients and approved by legal counsel.

Answer: (B)

Gifts and non-cash compensation under MSRB rules are allowed only if they are reasonable in value and frequency and do not create or appear to create a conflict of interest or influence on a decision. This safeguards against any perception that business choices are being swayed by gifts, rather than by merit or market factors. Lavish or excessive gifts, or anything intended to affect how decisions are made, are not permitted. Internal controls—like spending caps and monitoring—are common to ensure gifts stay within these reasonable bounds. While firms may have disclosure or approval processes as part of compliance, the core standard is reasonableness and avoidance of any conflict or influence.