by Brendan M. Lynch | October 01, 2005

Watchdog illustrationPlanners don’t have any easy time of it these days. And if tough contract negotiations, complex logistics and increasing scrutiny by procurement aren’t enough of a challenge, insurance meeting planners have yet another minefield to cross: the threat that their incentive programs will run afoul of the watchdogs at the National Association of Securities Dealers.
    Even insurance industry planners who don’t organize incentive sales contests must follow rules set forth by New York City-based NASD for training and education meetings, gift giving, entertainment expenses and record keeping.
    “We follow NASD rules and regulations in that we don’t offer tours or pay for spouse travel or give any incentive-type gifts,” says Sharon Chapman, CMP, CMM, travel and corporate events planner with the Berkshire Life Insurance Company of America, based in Pittsfield, Mass. “And we do the mandatory number of hours of business meetings throughout the day. In other words, our business meetings are meetings.”
    While Chapman is upfront about adherence to NASD requirements, other planners contacted by M&C for this story would not give their names for fear of attracting undue attention from the regulatory body. Which leads to the  inevitable question: Just what or who is NASD, anyway?

An appetite for discipline
NASD isn’t a government agency; rather, it is the biggest private-sector provider of regulatory services in the world, working at the behest of the Securities and Exchange Commission, the U.S. government’s regulator of securities brokers nationwide. (A “security” is a stock certificate or bond, held as evidence of debt or of ownership, that may be traded in a market.)
With a $500 million annual budget and 2,000 employees, NASD oversees thousands of brokerage firms and registered securities dealers. The organization licenses individuals and firms and writes the rules that govern their activities. In recent years, however, the agency has become a very aggressive disciplinarian.
    “Before, it was sort of the fox guarding the chicken coup, but now they have toughened up,” says Jonathan T. Howe, Esq., a contributing editor of M&C and Chicago-based senior partner in the law firm of Howe & Hutton Ltd., which specializes in meetings, travel and hospitality law. And in this case, “toughened up” means doling out punishment.
    “NASD decided it would rather be in charge of discipline than let the government be the sole source,” Howe continues. “Now, about once a month, you pick up The Wall Street Journal, and there is a full-page article about people who have been disciplined.”
    For meeting planners to be subject to NASD oversight, they must work at companies that sell variable life and annuity insurance products. These give the investor an opportunity to gain from their potential capital appreciation and also subject the investor to risks from the marketplace the characteristics of a security.
    To sell a security or a security-like product, “you have to be a broker/dealer,” explains Larry Kosciulek, associate director for investment companies regulation for NASD. “All broker/dealers in the United States who have retail accounts have to be members of NASD.” As a result, that agency performs federal oversight affecting meeting planners at scores of companies nationwide.