One Big Spreadsheet

Compliance also comes into play when developing meeting content and managing attendee lists.

While NASD does not set specific guidelines about meeting agendas, the program “should obviously be business-related,” says Gerstner. In addition to making sure that the agenda accurately portrays the meeting's content, “we are even more concerned that there is sufficient education to cover the amount of time we are hosting the reps. Every meeting must have six hours of content for each eight-hour meeting day.”

Issuing invitations and tracking attendee lists for the banking road shows will account for about 40 percent of the time Fitzgerald spends planning those events. “I'll probably spend about two or three hours a day tracking the approvals of the reps invited to come to the meeting. It's like managing a registration process — it's very cumbersome. The actual meeting planning is the simple part.”

As far as record keeping is concerned, accurately recording approvals is critical in the event that the meeting is subjected to NASD inspection.

The process works like this: After determining dates, locations, and agenda, Fitzgerald works with her regional director to send her key Allstate account people out to the banks. These firms, Fitzgerald explains, make the decisions on which reps can and can't attend a meeting. (Disciplinary action against a broker, for example, could disqualify him or her from attending.) “I have to keep track of all that,” says Fitzgerald. “If they're approved, they get highlighted in green; if not, it's red; and if a decision is pending, it's black. It's crucial that I make sure that no one comes to one of our meetings who is not supposed to be there.”

The same rigorous record-keeping, says Fitzgerald, is necessary to reconcile all of the meetings' financial records. “We need to know exactly what we've paid for, and what we haven't paid for,” she says. For example, Fitzgerald mandates that master bills from hotels include only the room rates and taxes. “Anything else on that bill, whether it's room service or a movie rental, we're not going to pay. We don't want it on the bill so we can avoid any kind of rule interpretation problem. I'll dispute the bill unless it's absolutely clean.”

Record-keeping is also complicated by the fact that Allstate attendees come from various companies that have their own guidelines pertaining to meetings. “We could be dealing with 50 different companies for one meeting, all with their own sets of rules,” says Gerstner. “One firm might mandate that we can't spend more than a certain amount of money per person. Another might require eight hours of educational content at the meeting. It gets complicated when you're trying to accommodate all those different requirements at one meeting.”

“It can get confusing,” agrees Fitzgerald. “I've got one firm that's sending reps to a meeting and they won't let us pay for their airfare but will allow us to pay for their ground transportation. So the record-keeping sometimes has to be done kind of piecemeal. Sometimes it seems like my desk is just one big spreadsheet.”

Compliance Sniff Test

While a general familiarity with the rules and regulations helps to limit the amount of time Fitzgerald and Gerstner must spend being “meeting police,” they do have to be vigilant about every aspect of the meeting. There are occasions when they have to nix certain meeting activities that might not pass the compliance sniff test.

Golf outings can be particularly troublesome, says Gerstner. “Our rule — and we believe it's in the spirit of the NASD rules — is that you can pay for “reasonable” business entertainment. You wouldn't take a group for a round of golf at Pebble Beach [which costs more than $400 to play], but certainly you could take a foursome to a local course to play some golf while they talked about business.”

On the other hand, Gerstner says, if the golf outing involves 10 foursomes that are split up in such a way that it's clear no business will be discussed, NASD would not consider it compliant.

“The same holds true for meals,” Gerstner says. “We'll get asked whether it's proper to entertain a large group at a nice restaurant. Well, if you provide the meal, and the only business conducted is a 15-minute talk by the sponsor, what's the justification?”

Adds Fitzgerald: “We're constantly reminding our people to be regulation-conscious. Don't take 30 attendees out for drinks after a reception. That is just asking for trouble!”

When NASD Comes Knocking

In addition to inspections with cause, NASD also conducts more than 2,000 routine inspections of broker/dealers every year. This means that each of the 5,500 member companies is going to open its doors to inspectors from NASD, the governing body for securities firms, on a regular basis.

“It is always uncomfortable to have a regulator in your office,” says Maribel Gerstner, assistant vice president and chief compliance officer, Allstate Distributors & ALFS Inc., Northbrook, Ill. “But with us it is less burdensome because we don't have customer accounts, so usually it's a much easier process. On the other hand, because we don't have day-to-day retail operations, it gives inspectors a chance to [scrutinize other] things — for example they can look at the kinds of rules we give to our wholesalers, or look at our marketing practices.

“Here's the thing,” she concludes. “When inspectors come into our office they can look at whatever they want, including all of Laurie's [Allstate Financial Meeting Manager Laurie Fitzgerald] meetings records. That's why she needs to make sure her records are as complete and comprehensive as possible.”

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