MSRB seeking approval from SEC for amendments to telemarketing rules

By Toni Weeks

San Luis Obispo, Calif., March 4 - The Municipal Securities Rulemaking Board is seeking approval from the Securities and Exchange Commission of a proposal to amend its telemarketing rules.

According to an MSRB notice, the amendments to MSRB Rule G-39 would adopt provisions substantially similar to the telemarketing rules of the Federal Trade Commission to prohibit deceptive and abusive telemarketing acts or practices.

The proposed rule amendments would

• Require a broker, dealer or municipal securities dealer making telemarketing calls to maintain a record of a caller's request not to receive further calls;

• Require a dealer using another entity to perform telemarketing services on its behalf to maintain responsibility for ensuring compliance with all provisions in MSRB Rule G-39;

• Prohibit dealers making telemarketing calls from blocking caller identification information. The telephone number provided by the dealer must permit any call recipient to make a do-not-call request during regular business hours;

• Prohibit a dealer from disclosing or receiving unencrypted consumer account numbers for use in telemarketing;

• Require that a dealer obtain the consent and account information of a person to be charged in a telemarketing transaction, with further requirements for transactions involving preacquired account information;

• Prohibit a dealer from abandoning any outbound telephone calls and to use technology that ensures abandonment of no more than 3% of all calls answered by a person. In addition, the telephone would be allowed to ring for at least 15 seconds or four rings before it is disconnected and, if a dealer is not available to speak with a person answering an outbound telephone call two seconds after the call recipient's greeting, to play a recorded message stating the name and telephone number of the dealer on whose behalf the call was placed;

• Prohibit a broker, dealer or municipal securities dealer from initiating an outbound telephone call that delivers a prerecorded message without a person's express written agreement to receive such calls. In addition, the calls would require an opt-out mechanism from future calls;

• Prohibit a dealer from presenting or depositing into the credit card system for payment a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the dealer; and

• Exempt most business-to-business calls from most of the provisions of the amended rule.

Background

The SEC directed the MSRB in May 2011 to conduct a review of its telemarketing rules and propose amendments that require protections that are at least as strong as those provided by the FTC's telemarketing rules. The FTC has been amending its telemarketing rules since 1997 in light of changing telemarketing practices and technology, and the SEC was concerned that "the [self-regulatory] rules have not kept pace with the FTC's rules and thus may no longer meet the standards of the Prevention Act," which requires any national securities exchange or registered securities association to adopt rules substantially similar to FTC rules to prohibit deceptive and abusive telemarketing acts or practices.

Comment solicitation

Interested persons may comment on the proposed amendments by March 25 at http://www.sec.gov/rules/sro.shtml or by sending an email to rule-comments@sec.gov, attention file number SR-MSRB-2013-02 on the subject line. In addition, paper comments may be sent in triplicate referring to the same file number to Elizabeth M. Murphy, secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC, 20549.

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