Gratuities - Rules 347 and 417

Each year at this time, the Exchange receives inquiries regarding gratuities by members and member organizations to employees of financial concerns and employees of the Exchange.

It may be helpful, therefore, to restate the Exchange's policy on gratuities, which is reflected in Rules 347 and 417. A gift of any kind is regarded as a gratuity. Gratuities of a value less than specified (see below) are not subject to the reporting requirements of Rules 347. In determining whether this exemption is applicable, each donor must aggregate all gratuities to any person during the calendar year.

Gratuities to Employees of Financial Concerns (Rule 347). Where a gratuity given to an employee of another member or member organization exceeds $100, the donor must obtain the prior written consent of the recipient's employer and file written notice of such consent with the Office of the Secretary before making the gratuity.

Where a gratuity given to any other person specified in Rule 347 (e.g., employees of banks, trust companies, insurance companies, corporations, associations, firms or individuals engaged in financial publishing, etc.) exceeds $50, the donor likewise must obtain the prior written consent of the recipient's employer and file written notice of the consent with the Office of the Secretary before making the gratuity.

Notices of consent required under Rule 347 should be made on the attached form. Additional copies of the form may be obtained at the service desks on the main and mezzanine levels of the Trading Floor or from the Office of the Secretary.

Regardless of its value and whether the written consent of the employer is required to be filed with the Office of the Secretary, members and member organizations are required to retain a copy of every gratuity given to the persons specified in Rule 347 for a period of at least three years.

Transactions Involving Exchange Employees (Rule 417). Under Rule 417(c), members and member organizations shall not directly or indirectly give, or permit to be given, anything of more than nominal value to any Exchange employee who has responsibility for a regulatory matter that involves the member or member organization (i.e., examinations, disciplinary proceedings, membership applications, listing applications, delisting proceedings, and dispute resolution proceedings that involve the member or member organization). Members and member organizations are also not permitted to otherwise give business gifts or courtesies to Exchange employees other than to the extent Exchange employees are permitted to accept such gifts and courtesies under the NASD Code of Conduct. All Amex employees are subject to the NASD Code of Conduct, which prohibits them from accepting cash and cash equivalents (e.g., gift certificates) and imposes an annual limit of $100 on non-cash gifts from a single source. Employees are required to report business gifts and courtesies they accept as specified in the "NASD Code of Conduct General Procedures."

Member and member organizations are reminded that records of all gifts and courtesies must be kept and retained for a period specified in SEC Rule 17a-4.

Any inquiry concerning these matters should be directed to Geraldine Brindisi at (212) 306-1408 or Bruce Ferguson at (212) 306-1403.