Both meeting planners and suppliers should be paying closer attention to regulatory scrutiny and its potential impact on meetings, says Christine Duffy, chairwoman of Meeting Professionals International and CEO of Maritz Travel Co.
Duffy made her observation after moderating a roundtable of corporate execs talking about industry issues at the opening general session of MPI's Professional Education Conference North America, held January 22 to 24 in Charlotte, N.C. Among the panelists was Patricia Carbee, senior vice president,and business development, Penn Mutual Life Insurance Co., who described how Penn Mutual meetings went through some “major changes” in the last half of 2005 in response to regulatory challenges. “We were asked to change how we're running our conferences,” she told the more than 2,000 industry professionals in attendance at the general session. “So imagine — in midyear we had producers trying to [qualify for] a conference and we changed the rules on them. We weren't very popular for a while.”
The regulatory environment drove these changes, Carbee said. Penn Mutual's focus has traditionally been on life insurance products, but its producers also sell annuities and investment products — thus bringing company meetings under the regulatory arm of NASD and the Securities and Exchange Commission. What has changed, Carbee said, is that while Penn Mutual could previously set up incentive programs favoring the sale of life insurance products, “we can't do that anymore. Everything has to be weighed equally. It's really had an impact on how we plan our conferences.”
Carbee also brought up regulations governing gifts. “In the industry, we can give only $100 worth of gifts to a producer in a year,” she said. “We used to give a gift basket worth more than that. Now we have to really think about what we give them — even as an amenity.”
New Entertainment Rules?
A further sign that the regulators are going to continue to monitor certain aspects of industry meetings is a recent proposal by NASD and the New York Stock Exchange to change business entertainment rules.
The rule that Carbee referred to — NASD Rule 3060 — prohibits any member firm or person associated with a firm from giving gifts in excess of $100. NASD, in further interpreting the rule, has determined that it does not prohibit “ordinary and usual business entertainment,” provided that the entertainment is “neither so frequent nor so extensive as to raise any question of propriety.”
However, in the last couple of years there have been some highly publicized cases of companies engaging in exorbitant entertaining. Consequently, NASD wants to provide greater clarity regarding entertainment spending.
Under the proposal, neither NASD nor the NYSE would impose specific dollar limits, but member firms would have to establish their own policies containing set dollar limits, or establish guidelines for expenses that would require advance super-visory approval. Companies would have to keep detailed records of business entertainment spending and make them available to the recipients' employers on request.