finra

FINRA

 

For Release:
Contact:
Wednesday, December 11, 1996
Nancy A. Condon - (202) 728-8379

NASD Regulation Creates New Telemarketing Rules to Protect Investors

Washington, D.C.--NASD Regulation, Inc., announced today that the Securities and Exchange Commission (SEC) approved its new telemarketing rules to protect investors from deceptive or abusive phone calls.

 

Under the terms of the National Association of Securities Dealers (NASD) new NASD Conduct Rule 2211, NASD member firms and their associated persons can no longer call an individual's residence for the purpose of selling securities or related services before 8 a.m. or after 9 p.m. without the individual's prior consent. In addition, when member firms and their associated persons make sales calls, they must immediately give their names, the firms they're calling from, their phone numbers, and disclose that the purpose of the call is to sell securities or related products.

 

Michael Jones, Director of the NASD Office of Individual Investor Services, hailed the new rule as a "victory for any investor who's ever been misled by a high-pressure sales call. Among other things, this rule ensures that anybody receiving a cold call from a broker will immediately know who they're dealing with, and why," Jones said. The new NASD rule provides exemptions from the above requirements for calls to other brokers/dealers and the firm's existing customers who have conducted a transaction or whose account has had activity (earned interest or dividends or had funds or securities deposited) in the past year.

 

NASD Conduct Rule 3110, which was approved in June 1995, mandates that member firms keep a list of people who request that they not be contacted by phone-the "do not call list." Rule 3110 was amended to prohibit NASD members from obtaining from a customer, or submitting for payment, a check, draft, or other form of negotiable paper drawn on a customer's checking, savings, or similar account (known as a "demand draft") without the customer's written approval. Firms must keep this written authorization for three years.

 

In approving the Telemarketing Rules, the SEC found that the measures achieved a reasonable balance between the Commission's interest in preventing members from engaging in deceptive and abusive telemarketing acts and the members' interest in conducting legitimate telemarketing practices. The rules go into effect immediately.