by Cheryl-Anne Sturken | October 01, 2006

In the wake of high-profile accounting scandals such as what took place with Enron and WorldCom, corporate governance has become the credo that much of American business now is forced to follow. And for meeting planners in the financial and insurance industries, the concept is particularly critical.

Not only must planners ensure they are in compliance with the financial controls their companies implemented following the federal Sarbanes-Oxley Act of 2002 (see “Making Sense of SOX”), they also must adhere to rules and regulations laid down by the Washington, D.C.-based National Association of Securities Dealers, which is now considering two measures that could have far-reaching implications for business entertainment and training/educational meetings.

The long arm of NASD

With an annual budget of $500 million and 2,000 employees, NASD is the biggest private-sector provider of regulatory services in the world. Working at the behest of the Securities and Exchange Commission, it oversees thousands of brokerage firms and registered securities dealers nationwide and writes the rules that govern their activities. In the past several years, it has stepped up its scrutiny and imposed a slew of noncompliance disciplinary actions -- generally in the form of steep fines.

This past April, to cite a recent example, Houston-based American General Securities Inc., a member company of American International Group, was fined $1.1 million. Among NASD’s charges was that AGS allowed certain mutual fund companies to participate in its “top producer or training meetings.” For all of 2004, NASD collected $102 million in fines.