by Cheryl-Anne Sturken | February 01, 2008

Maribel Gerstner


Maribel Gerstner makes
sure Allstate’s meetings
won’t raise red flags.

Working within the constraints dictated by the Financial Industry Regulatory Authority -- a nongovernmental body responsible for enforcing compliance with security regulations affecting 5,100 U.S.-based brokerage firms -- is one of the most challenging issues facing financial and insurance meeting planners today.

The rules that govern training and education meetings -- including entertainment, gratuities, gifts and incentives -- are dense and complex, not to mention maddeningly ambiguous, leaving plenty of room for interpretation and, consequently, pitfalls.

In the past several years, scrutiny of the securities industry, long known for its lavish business entertainment, has resulted in millions of dollars worth of fines to several firms. In February 2007, four Boston-based Fidelity broker-dealers were fined $3.75 million for, among other things, failing to maintain proper registration records. Likewise, in December 2006, New York City-based investment banking firm Jefferies & Co. was fined $5.5 million for providing improper gifts and excessive entertainment to equity traders of another broker firm, such as expensive bottles of wine, golf outings, hotel accommodations and Superbowl tickets.

To help deconstruct FINRA’s guidelines and ensure a compliant event, M&C spoke at length with Maribel Gerstner, assistant vice president and chief compliance officer for Northbrook, Ill.-based Allstate Distributors LLC and ALFS Inc., on how she guides the meetings team of the Fortune 100 company.

Compliance 101

There are several different but inter-related regulations meeting planners must follow when structuring trips or meetings for the registered representatives of broker dealers of other companies. For example, rules 2820 and 2830 in the guidelines pertain to non-cash compensation and govern merchandise, gifts, prizes, travel expenses, meals and lodging. Rule 3060, known as the gifts and gratuities rule, outlines the dollar limits on gift spending and the nuances that must be considered.

Which rules apply depends largely on the nature of the event and the relationship of the company hosting the event to those attending. “Compliance is a two-way street,” says Gerstner. “It is incumbent on meeting planners to know the basic rules up front. From there, they really need to rely on their compliance departments for guidance.”

Several key elements form the basis of ensuring an airtight, compliant meeting. Diligent adherence to these, says Gerstner, means the chances of FINRA knocking on your door demanding an audit will decrease significantly.

* Purpose of the meeting. This will dictate location, agenda, the guest list and meeting spend. The regulations that govern a training or educational meeting do not apply to a purely business meeting or a company’s in-house incentive program.

* Location. Where meetings are held is one of FINRA’s great gray areas. The rules addressing this issue use terms such as “reasonable” and “proximateness” to describe how location should be determined. FINRA interprets that to mean a site near an office of the representatives' (attendees’) firm or the product manufacturer. But does that mean within a 200-mile radius? How about a two-hour flight?

Your best bet, says Gerstner, is to pick a site/venue near the greatest number of people who will be attending the event. One way to do that is to figure out where the firms have the greatest concentration of representatives. “If you are doing a bunch of meetings involving people from all over the country, it makes more sense to conduct a series of regional meetings, rather than fly everyone to one location,” notes Gerstner, who adds that Allstate’s central Chicago location makes that decision an easier one for the company’s planners. “It’s definitely not about what would be the coolest place to hold this meeting. Does that mean you can’t hold a meeting in Hawaii? No, but it’s probably not a good idea, unless you are headquartered there.”