Finra Fines First Trust $10M Over Excessive Gifts, Falsified Records

First Trust Portfolios, a major issuer of US ETFs based in Wheaton, Illinois, was fined $10 million by the Financial Industry Regulatory Authority (Finra) for providing excessive non-cash compensation, including gifts, meals, and entertainment, to retail broker-dealer representatives over a period from at least 2018 to February 2024. The firm exceeded Finra's regulatory limits by offering lavish perks such as courtside basketball tickets, luxury suite NBA All-Star game access, and numerous concert and sporting event tickets, sometimes tying these perks to sales targets of its products. Additionally, First Trust falsified internal expense records and submitted inaccurate reports to client firms, including listing deceased individuals as attendees at events. Finra's rules aim to prevent financial recommendations from being unduly influenced by excessive gifts or entertainment, limiting non-cash compensation to modest annual values and occasional, non-sales-related meals or entertainment. First Trust agreed to pay the fine without admitting or denying the allegations and will provide annual compliance certifications to Finra for the next three years. The enforcement underscores Finra's commitment to ensuring compliance in the securities industry and protecting investor interests.