Text of Amendments to NASD Rule 2211 – Telemarketing
(Note: The original rule was formerly Article III, Section 1 of the NASD Rules of Fair Practice)
One June 28, 1996, the NASD filed a proposed change to the Telemarketing Rule, Rule 2110, in response to the rules introduced by the FTC regarding telemarketing. Below is the text of the rule as proposed. Rule 2211 is new, as is 3110 (g)(2) and (3).
CONDUCT RULES 2000. BUSINESS CONDUCT 2200. COMMUNICATIONS WITH CUSTOMERS AND THE PUBLIC 2211. Telemarketing No member or person associated with a member shall: (a) make outbound telephone calls to the residence of any person for the purpose of soliciting the purchase of securities or related services at any time other than between 8 a.m. and 9 p.m. local time at the called person’s location, without the prior consent of the person; or (b) make an outbound telephone call to any person for the purpose of soliciting the purchase of securities or related services without disclosing promptly and in a clear and conspicuous manner to the called person the following information: (1) the identity of the caller and the member firm; (2) the telephone number or address at which the caller may be contacted; and (3) that the purpose of the call is to solicit the purchase of securities or related services. (c) The prohibitions of paragraphs (a) and (b) shall not apply to telephone calls by any person associated with a member, or a person acting at the direction of a person associated with a member, for the purpose of maintaining and servicing the accounts of existing customers of the member under the control of or assigned to such associated person: (1) to an existing customer who, within the preceding twelve months, has effected a securities transaction in, or made a deposit of funds or securities into, an account that, at the time of the transaction or the deposit, was under the control of or assigned to, such associated person; (2) to an existing customer who previously has effected a securities transaction in, or made a deposit of funds or securities into, an account that, at the time of the transaction or deposit, was under the control of or assigned to, such associated person, provided that such customer’s account has earned interest or dividend income during the preceding twelve months, or (3) to a broker or dealer. For the purposes of paragraph (c), the term “existing customer” means a customer for whom the broker or dealer, or a clearing broker or dealer on behalf of such broker or dealer, carries an account. 3000. RESPONSIBILITIES RELATING TO ASSOCIATED PERSONS, EMPLOYEES, AND OTHERS’ EMPLOYEES 3100. BOOKS AND RECORDS, AND FINANCIAL CONDITION 3110. Books and Records (g) [Cold Call] Telemarketing Requirements Each member shall: (1) make and maintain a centralized do-not-call list of persons who do not wish to receive telephone solicitations from such member or its associated persons; (2) not obtain from a customer or submit for payment a check, draft, or other form of negotiable paper drawn on a customer’s checking, savings, share, or similar account, without that person’s express written authorization, which may include the customer’s signature on the negotiable instrument; and (3) maintain the authorization required by subparagraph (2) for a period of three years.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
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