[ by Howard Haykin ]

The MSRB proposes to amend Rule G-39 governing telemarketing, by adding provisions substantially similar to FTC rules that prohibit deceptive and other abusive telemarketing acts or practices.  Currently, Rule G-39 requires brokers, dealers, and municipal securities dealers (“dealers”) to, among other things, (i) maintain do-not-call lists, and (ii) limit the hours of telephone solicitations.

In 1996, the SEC directed the MSRB to enact a telemarketing rule in accordance with the Prevention Act.  The Prevention Act requires the Commission to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices, unless the Commission determines either that the rules are not necessary or appropriate for the protection of investors or the maintenance of fair and orderly markets, or that existing federal securities laws or Commission rules already provide for such protection.

In 1997, the SEC determined that telemarketing rules promulgated and expected to be promulgated by SROs, together with the other rules of the SROs, the federal securities laws, and the SEC’s rules thereunder, satisfied the requirements of the Prevention Act because, at the time, the applicable provisions of those laws and rules were substantially similar to the Telemarketing Sales Rule.

Since then, the FTC has amended its telemarketing rules in light of changing telemarketing  practices and technology.  However, concerned that SROs had not kept pace with FTC changes, Commission staff directed the MSRB to conduct a review of its telemarketing rule and update its rule protections so that they are at least as strong as those provided by the FTC’s telemarketing rules.

What MSRB Is Proposing.    The proposed rule amendments, as directed by the Commission staff, amend and adopt provisions in Rule G-39 that:

• adopts a provision in Rule G-39(a)(iv) reminding dealers that engage in telemarketing that they also are subject to requirements of relevant state and federal laws and  - including the Prevention Act, the Telephone Consumer Protection Act, and the rules of the FCC relating to telemarketing practices, and the rights of telephone consumers.   [General Telemarketing Requirements]
   
• deletes from Rule G-39(d)(vi) the requirement that a dealer honor a firm-specific do-not-call request for 5 years from the time the request is made, and in order to make that requirement a permanent one - indefinitely.  It also clarifies the rule to reflect that the record of do-not-call requests must be permanent.   [Maintenance of Do-Not-Call Lists]
   
• retains the provision in Rule G-39(f) that dealers, when using another entity to perform telemarketing services on its behalf, the dealer remains responsible for ensuring compliance with all provisions contained in the rule.  Further proposed that dealers must consider whether the entity or person handling the outsource task is properly registered or licensed, where required.  [Outsourcing Telemarketing]
   
• retains the provision in Rule 39(h) that requires the caller to transmit caller ID information, and is explicitly prohibited from blocking such information.     [Caller Identification Information].  
   

The proposed rule amendments addresses other provisions, including:  (i) Submission of Billing Information;  (ii) Abandoned Calls;  (ii) Prerecorded Messages;  (iv)  Credit Card Laundering.   For the complete text of the rule filing, click on the hyperlink below.

For further details,, go to:   [ MSRB Rule Filing 13-2, 2/11/13 ].