No Free Lunches at M&G as 20-Pound Gift Limit Imposed on Staff

  • New rules require any meal in excess of $29 to be logged
  • M&G asks brokers to detail costs of any hospitality by e-mail

M&G Investments, the asset manager owned by Prudential Plc, has tightened hospitality rules by capping the value of entertainment staff can receive from brokers at 20 pounds ($29) as regulators seek to curb inducements between financial firms.

M&G will require staff to log “hospitality, or gifts provided to us whether at a formal conference or business meal, if the value exceeds 20 pounds,” M&G said in a letter sent to brokers at the end of January, a copy of which was seen by Bloomberg News. Gifts worth more than that amount may have to be returned or donated to charity, it wrote.

Traders and sales staff have long used gifts, meals and events top help build relationships with money managers in the hope of securing business. By spelling out what’s allowed, the asset manager is seeking to clarify the boundaries of what’s acceptable, said a person with knowledge of the review.

A spokesman for M&G declined to comment. Prudential bought M&G in 1999 and the asset manager currently employs 1,500 people and oversees more than 247 billion pounds for its parent company as well as third-party clients. Anne Richards, 51, was appointed chief executive officer on Tuesday, joining from Aberdeen Asset Management Plc.

Regulatory Demands

In the letter, third-party brokers are asked to detail in an e-mail the value of any hospitality or gifts to be provided at any event -- including conferences, seminars, training events or corporate access meetings -- to which they invite M&G employees. Staff may have to make a contribution to the cost or reject the invite if “it exceeds allowable values,” the letter states.

Prudential hasn’t gone as far as Barclays Plc, which in 2014 banned employees from giving or receiving gifts or entertainment of any value, while requiring meetings with brokers to take place in the bank’s own offices.

Since the financial crisis, regulators have demanded organizations tighten their corporate entertainment and gifts policies and introduced tougher laws on bribery and corruption. In 2010 the U.K. implemented the Bribery Act, and the Financial Conduct Authority is due to publish the findings of a review into inducements and conflicts this year as part of MiFID II, the European Union’s overhaul of market rules at the heart of the response to the financial crisis.

The clampdown on corporate hospitality is set against the backdrop of the billions of pounds of fines levied on the City of London, including for the attempted rigging of benchmark interest rates and currencies that revealed collusion between traders and brokers. London-based interdealer brokers including ICAP Plc and RP Martin Holdings Ltd. were fined by U.S. and U.K. authorities after regulators claimed employees helped game Libor in exchange for gifts including cash, dinners, champagne and trips to Las Vegas.

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