[Federal Register: January 20, 2004 (Volume 69, Number 12)]
[Notices]
[Page 2801-2805]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ja04-75]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49055; File No. SR-NASD-2003-131]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Order Approving Proposed Rule Change, and Notice of
Filing and Order Granting Accelerated Approval to Amendment No. 1
Relating to Proposed Amendments to NASD's Telemarketing Rules to
Require Members To Participate in the National Do-Not-Call Registry
January 12, 2004.
I. Introduction
On August, 18, 2003, the National Association of Securities
Dealers, Inc. (``NASD''), filed with the Securities and Exchange
Commission (``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change relating to the NASD's adoption
of telemarketing rules to require its members to participate in the
national do-not-call registry. The proposed rule change was published
for comment in the Federal Register on August 27, 2003.\3\ On December
18, 2003, the NASD submitted Amendment No. 1 to the proposed rule
change.\4\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The Commission published the proposed rule changes filed by
the NASD and the MSRB simultaneously. See Securities Exchange Act
Release Nos. 48390 (August 22, 2003), 68 FR 51613 (August 27, 2003)
(SR-NASD-2003-131); 48389 (August 22, 2003), 68 FR 51609 (August 27,
2003) (SR-MSRB-2003-07).
\4\ See letter from Brian J. Woldow, Attorney, NASD to Katherine
A. England, Assistant Director, Division of Market Regulation,
Commission, dated December 17, 2003 (``Amendment No. 1'').
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The Commission received five comment letters on the proposed rule
change.\5\ The text of proposed Amendment No. 1 is below. Additions
from the original filing are in italics; deletions are in [brackets].
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\5\ See letters from Ted F. Angus, V.P. and Senior Corporate
Counsel for RetailBrokerage, Charles Schwab, to Mr. Jonathan G.
Katz, Secretary, Commission, dated September 17, 2003, (``Schwab
Letter''); James Y. Chin, A.V.P., Director and Counsel, State
Government Affairs & Staff Advisor to the State Telemarketing
Subcommittee, Securities Industry Association, to Mr. Jonathan G.
Katz, Secretary, Commission, dated September 17, 2003, (``SIA
Letter''); Carl B. Wilkerson, Chief Counsel, Securities &
Litigation, American Council of Life Insurers, to Jonathan G. Katz,
Secretary, Commission, dated September 17, 2003, (``ACLI Letter'');
Kevin S. Thompson, V.P., Deputy General Counsel, CUNA Mutual Group,
to Jonathan G. Katz, Secretary, Commission, dated September 23,
2003, (``CUNA Letter''); Richard M. Whiting, Executive Director and
General Counsel, The Financial Services Roundtable, to Mr. Jonathan
G. Katz, Secretary, Commission, dated September 25, 2003, (``FSR
Letter'').
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* * * * *
2200. Communications With the Public
* * * * *
221[1]2. Telemarketing
(a)-(f) (No Change).
(g) Definitions
(1) Established business relationship
(A) An established business relationship exists between a member
and a person if:
(i) the person has made a financial transaction or has a security
position, a money balance, or account activity with the member or at a
clearing firm that provides clearing services to such member within the
previous 18 months immediately preceding the date of the telemarketing
call; [or]
(ii) the member is the broker/dealer of record for an account of
the person within the previous 18 months immediately preceding the date
of the telemarketing call; or;
[(ii)](iii) the person has contacted the member to inquire about a
product or service offered by the member within the previous three
months immediately preceding the date of the telemarketing call.
(B) A person's established business relationship with a member does
not extend to the member's affiliated entities unless the person would
reasonably expect them to be included. Similarly, a person's
established business relationship with a member's affiliate does not
extend to the member unless the person would reasonably expect the
member to be included.
(2)-(3) (No Change).
(4) the term ``account activity'' shall include, but not be limited
to, purchases, sales, interest credits or debits, charges or credits,
dividend payments, transfer activity, securities receipts or
deliveries, and/or journal entries relating to securities or funds in
the possession or control of the member.
(5) the term ``broker/dealer of record'' refers to the broker/
dealer identified on a customer's account application for accounts held
directly at a mutual fund or variable insurance product issuer.
* * * * *
II. Description
A. General
The Federal Trade Commission (``FTC'') and the Federal
Communications Commission (``FCC'') established requirements for
sellers and telemarketers to participate in a national do-not-call
registry.\6\ Since June 2003, consumers have been able to enter their
home and mobile telephone numbers into the national do-not-call
registry, which is maintained by the FTC. Under rules of the FTC and
FCC, sellers and telemarketers generally are prohibited from making
telephone solicitations to consumers whose numbers are listed in the
national do-not-call registry.
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\6\ Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991 (``TCPA''), FCC 03-153, adopted June 26,
2003.
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On July 2, 2003, the SEC requested that the NASD amend its
telemarketing rules to include a requirement for its members to
participate in the national do-not-call registry.\7\ Because broker/
dealers and banks are subject to the FCC's jurisdiction, the NASD
modeled its rules after the FCC, specifically tailoring the rules to
broker/dealers and the securities industry.\8\
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\7\ The Telemarketing and Consumer Fraud and Abuse Prevention
Act of 1994 requires the Commission to promulgate telemarketing
rules substantially similar to those of the FTC or direct self-
regulatory organizations to do so, unless the Commission determines
that such rules are not in the interest of investor protection. 15
U.S.C. 6102(d) (2003).
\8\ See The Do-Not-Call Implementation Act, 108 Pub. L. 10, 117
Stat. 557 (Mar. 11, 2003).
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The NASD submitted a proposed rule change to amend NASD Rule
2211,\9\ to implement rules that prohibit its members from making
telemarketing calls to people who have registered on the FTC's national
do-not-call registry.\10\ The proposal retains the requirement that
members make their a telemarketing calls only during certain times of
day (8 a.m. to 9 p.m. local time at the called party's location) and a
restriction against making calls to persons who have requested to be on
a firm-specific do-not-call list.\11\
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\9\ The Commission notes that, in Amendment No. 1, the NASD
changed the numbering of NASD Rule 2211 to NASD Rule 2212.
Accordingly, unless otherwise specified, this notice generally
references proposed NASD Rule 2212, as amended.
\10\ See proposed NASD Rule 2212(a)(3).
\11\ See proposed NASD Rule 2212(a)(1)&(2).
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B. Exceptions
The NASD currently provides its members with an ``existing
customer'' exception to its requirement that members make their a
telemarketing calls only during certain times of day (8 a.m. to 9 p.m.
local time at the called party's location) and to its requirement that
members provide certain information about the caller during the course
of the telephone conversation.\12\ The proposed rule change would
replace the ``existing customer'' exception with an ``established
business relationship'' exception, a ``prior
[[Page 2802]]
express invitation or permission'' exception and a ``personal
relationship exception.''\13\
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\12\ See NASD Rule 2211(c)&(d).
\13\ See proposed NASD Rule 2212(b).
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As originally proposed, the established business relationship
exception would have enabled NASD members to make a telephone
solicitation as long as the call's recipient had made a financial
transaction with the member within 18 months preceding the date of the
telemarketing call, or if the recipient had contacted the member to
inquire about a product or service offered by the member within the
three months preceding the date of the telemarketing call.\14\ The
proposed established business relationship exception would not provide
an exception for those individuals who have requested to be put on a
member's firm-specific do-not-call list or from the time-of-day
restrictions.
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\14\ See original proposed NASD Rule 2211(g)(1)(A).
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The second exception to the national do-not-call rules pertains to
those persons from whom the member has obtained prior express written
invitation or permission to make a telemarketing call.\15\ The final
exception pertains to those persons with whom an associated person of a
member has a ``personal relationship.''\16\
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\15\ See proposed NASD Rule 2212(b)(2).
\16\ See proposed NASD Rule 2212(b)(3).
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C. Telemarketing Procedures
The NASD also proposed that its members must institute certain
procedures related to do-not-call lists. As proposed, these procedures
must include requirements to: have a written policy for maintaining a
do-not-call list, train personnel engaged in telemarketing in the
existence and use of the do-not-call list, record and disclose requests
from a person to be added to the member's do-not-call list, and have
the member provide the called party with the name of the individual
caller, the name of the member, a telephone number or address at which
the member may be contacted, and that the purpose of the call is to
solicit the purchase of securities or related services.\17\ The
proposed rules clarify that, absent a specific request, a person's do-
not-call request would apply to the member making a call, but not an
affiliated entity of such a member unless the person would expect such
an affiliated entity to be included, given the identification of the
caller and the product being advertised.\18\ Further, the NASD proposed
that members must maintain a record of a caller's request to receive no
further telemarketing calls and must honor that request for a period of
five years.\19\
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\17\ See proposed NASD Rule 2212(d)(1)-(d)(4).
\18\ See proposed NASD Rule 2212(d)(5).
\19\ See proposed NASD Rule 2212(d)(6).
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D. Safe Harbor
In addition to proposing certain baseline procedures that members
must follow, the NASD proposed a ``safe harbor'' under which a member
would not be liable for calling a person on the national do-not-call
registry if that call is the result of an error and if the
telemarketer's routine business practice meets certain specified
standards.\20\ In order to benefit from this safe harbor the member
must establish and implement written procedures to comply with the
national do-not-call rules, train its personnel in those procedures,
maintain a list of telephone numbers that the member may not contact,
and use a process to prevent telephone solicitations to any telephone
number that appears on any national do-not-call registry, including a
version of the list obtained from the administrator.
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\20\ See proposed NASD Rule 2212(c).
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E. Miscellaneous
The NASD proposed that the applicability of the telemarketing and
telephone solicitation restrictions and exceptions would extend to
wireless telephone subscribers.\21\ Further, the NASD proposed that if
a member uses another entity to perform telemarketing services on its
behalf, the member remains responsible for ensuring compliance with all
provisions contained in proposed NASD Rule 2212.\22\
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\21\ See proposed NASD Rule 2212(e).
\22\ See proposed NASD Rule 2212(f).
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III. Summary of Comments
The commission received five comment letters addressing the
proposed rule change.\23\ All five letters expressed concerns with the
NASD's proposed amendments to NASD Rule 2212.
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\23\ See supra note 5.
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A. Established Business Relationship
In general, the five commenters believe that the proposed rule
change, as proposed in the original filing, would restrict the ability
of member firms to contact their existing customers.\24\ The
commenters' primary concern relates to the NASD's proposed definition
of an ``established business relationship'' exception.\25\ The
commenters generally stated the NASD's proposed version of the
established business relationship exception, which is created when a
customer has ``effected a securities transaction or deposited funds or
securities with the member'' is too limited in scope and appears
inconsistent with the TCPA and FCC Rules.
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\24\ See ACLI Letter, at 3-4; Charles Schwab Letter, at 4; CUNA
Letter, at 2; FSR Letter, at 2-3; SIA Letter, at 4.
\25\ Id.
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The established business relationship exclusion, under the FCC's
amendment to the TCPA, provides that formation of an existing
relationship involves a voluntary two-way communication ``with or
without an exchange of consideration.''\26\ By limiting the scope of
the established business relationship exclusion, the commenters believe
that the proposed rule change restricts opportunities for both broker-
dealers and customers and may preclude member firms from fulfilling
their account monitoring responsibilities.\27\
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\26\ 47 CFR 64.1200(f)(3).
\27\ See FSR Letter, at 2.
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In addition, commenters expressed concerns that changing the
interpretation from a customer that ``carries an account'' to requiring
a ``financial transaction'' within the previous eighteen months imposes
difficult compliance issues, increases confusion, and generally
restricts the ability of broker-dealers to contact their customers.
These commenters believe the change undermines the broker-client
relationship. In addition, some commenters claimed that narrowing the
scope of existing customers for the established business relationship
exception would force broker-dealers to implement costly system changes
that distinguish among their account holders.\28\ As a whole, the
commenters assert that the NASD is setting forth a new concept that was
not included in the FCC Rules under the amended TCPA.\29\
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\28\ FSR Letter at 4; Schwab Letter, at 5; SIA Letter, at 2.
\29\ See Schwab Letter; SIA Letter; ACLI Letter; CUNA Letter;
FSR Letter.
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All five commenters believe that the NASD's definition of an
established business relationship is too narrow and omits various
situations under which a broker/dealer may need to contact its
customers.\30\ For example, one commenter believes that the definition
of established business relationship does not properly accommodate the
interests of broker/dealers distributing variable life insurance and
variable annuities.\31\ The same commenter states that variable life
insurance and annuity contracts are long term accumulation
[[Page 2803]]
products necessitating long-term business relationships with
customers.\32\ Three commenters state that the proposed definition of
an established business relationship is significantly narrower than the
NASD's definition of existing customer, which is used for NASD's
existing telemarketing rules and the FCC's and FTC's definition of
established business relationship.\33\ Two commenters also believe that
an established business relationship generally should exist when a
customer is an account holder at a member firm.\34\ Charles Schwab
states that the proposed rule should permit a member to win back a
customer's account.\35\
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\30\ See ACLI Letter, at 3-4; Schwab Letter, at 4; CUNA Letter,
at 2; FSR Letter, at 2-3; and SIA Letter, at 4.
\31\ ACLI Letter, at 2-4.
\32\ ACLI Letter, at 3.
\33\ See SIA Letter, at 3-4; Charles Schwab Letter at 2-4; and
FSR Letter at 2-3.
\34\ See SIA Letter at 3; and Schwab Letter at 3.
\35\ See Schwab Letter, at 5. The FCC has stated, ``a consumer
who once had telephone service with a particular carrier or a
subscription with a particular newspaper could expect to receive a
call from those entities in an effort to `win back' or `renew' that
consumer's business within eighteen (18) months.'' 68 FR 44144,
44158 (July 25, 2003).
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The commenters request a review of the proposal with consideration
of the wide array of business activities of all member firms. One
commenter stated that the statutory 21-day comment period was
insufficient to address the issues raised by this proposed rule
change.\36\ Most commenters urged the NASD to revise the proposed rule
change by expanding the definition of ``established business
relationship'' to accommodate an effective means for member firms to
deliver products and services to customers.\37\
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\36\ See ACLI Letter, at 5.
\37\ See ACLI Letter, at 5; SIA Letter, at 4; CUNA Letter, at 2;
and FSR Letter, at 3.
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B. Networking Agreements
One commenter stated that the proposed definition of established
business relationship does not properly provide for networking
relationships between different entities.\38\ That commenter believes
that if a person maintains an account at a bank, the person should be
viewed as having an established business relationship with that bank's
networking broker/dealer.
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\38\ See CUNA Letter at 2.
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C. The Prior Express Written Consent Exception
As described above, NASD's proposed rule contains an exemption from
the do-not-call provisions if a consumer has provided consent in
writing to be called by the firm.\39\ One commenter believes that
NASD's rule is inconsistent with the FTC and FCC rules in that it
requires ``written'' consent.\40\
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\39\ See proposed NASD Rule 2212(b)(2).
\40\ See FSR Letter at 4-5.
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IV. Amendment No. 1
A. Established Business Relationship
In its letter included within Amendment No. 1, NASD noted that
proposed NASD Rule 2212 would restrict only ``telephone
solicitations,'' which would be defined as ``the initiation of a
telephone call or message for the purpose of encouraging the purchase
or rental of, or investment in, property, goods, or services, which is
transmitted to any person.'' Accordingly, under the original proposed
definition, the NASD interpreted a telephone call to a customer
concerning a margin call or similar administrative event would not
constitute a telephone solicitation.
In response to commenters' concerns about the narrow scope of the
established business relationship exception, the NASD stated that a
member may, at times, be compelled to contact a customer to satisfy the
member's attendant agency obligations, including situations where
market swings, interest rate changes, new tax laws, or specific
industry or company news may necessitate a broker contacting his or her
customer.
In addition, the NASD proposed two changes to the definition of an
``established business relationship.'' The first change to the
definition would encompass situations where the person has a security
position, a money balance, or account activity at a clearing firm on
behalf of such member within the previous 18 months. The second change
to the definition would include situations where a member was the
``broker/dealer of record'' for an account of a person within the 18
months immediately preceding the date of the telemarketing call. Both
definitions of established business relationship continue for 18 months
after a triggering event, thus providing an opportunity for a firm to
win back a customer.
Moreover, the NASD noted that the proposed rule change cannot
assure members that compliance with the proposed NASD Rule 2212 ensures
compliance with FCC rules because members also must comply with the
telemarketing rules of the FCC and any FCC interpretations of those
rules.
B. Networking Agreements
In response to one commenter's concerns with respect to networking
agreements, the NASD stated that it did not agree with the commenter's
view on the scope of a member's established business relationship with
banks' networking broker/dealer. The NASD stated that it believed that
the FCC and FTC rules concerning ``related parties'' were clear in that
a person's established business relationship with a member does not
extend to the member's affiliated entities unless the person would
reasonably expect them to be included. The NASD stated that it
similarly designed its established business relationship exception to
not extend to the member unless the person receiving the call would
reasonably expect the member to be included as a related party. The
NASD stated that it does believe that a networking arrangement, which
is formed by contract and that also may be terminated by a bank under
such contract, meets the threshold intended by the FCC and FTC rules.
In addition, it stated that it does not believe that a customer of the
bank that has not made a financial transaction with a broker/dealer
would reasonably expect to be contacted by such broker/dealer.
C. Prior Express Written Consent Exception
In response to one commenter's concern about the need for the prior
express consent to be in writing, the NASD stated that it interpreted
the FCC and FTC rules to require prior written consent in order for an
exception to the prohibition against calling the registrants on the
national do-not-call registry to apply. The NASD noted that the FCC
rule states that a person or entity shall not be held liable for
violating the national do-not-call registry prohibition if ``[i]t has
obtained the subscriber's prior express invitation or permission. Such
permission must be evidenced by a signed, written agreement between the
consumer and seller which states that the consumer agrees to be
contacted by this seller and includes the telephone number to which the
calls may be placed.''\41\ The NASD stated that the FTC rule also
requires prior express written notice.\42\ Moreover, the NASD believes
the potential for misuse of this exception is
[[Page 2804]]
heightened if it can be based on verbal consent. Based on the
foregoing, the NASD declined to amend the prior consent provisions to
accommodate verbal requests.
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\41\ 68 FR 44144, 44177 (July 25, 2003) (codified at 47 CFR
64.1200(c)(2)(ii)) (emphasis added).
\42\ The FTC rule states that a seller or telemarketer may call
a person on the national do-not-call registry if the seller or
telemarketer ``has obtained the express agreement, in writing, of
such person to place calls to that person. Such written agreement
shall clearly evidence such person's authorization that calls made
by or on behalf of a specific party may be placed to that person,
and shall include the telephone number to which the calls may be
placed and the signature of that person.'' 68 FR 4580, 4672 (January
29, 2003) (codified at 16 CFR 310.4(b)(iii)(B)(i)) (emphasis added).
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V. Discussion and Commission Findings
After careful review of the proposed rule change and the related
comments, the Commission finds that the proposed rule change, as
amended, is consistent with the requirements of the Act and the rules
and regulations thereunder which govern the NASD \43\ and, in
particular, the requirements of Section 15A(b)(6) of the Act and the
rules and regulations thereunder.\44\ Section 15A(b)(6) of the Act
requires, among other things, that NASD's rules must be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest.
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\43\ Additionally, in approving this rule the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition and capital formation. 15 U.S.C. 78c(f).
\44\ 15 U.S.C. 78o-3(b)(6).
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A. General
The Commission believes that the investing public's participation
in the do-not-call registry, as described in the proposed rule change,
creates an expectation among national do-not-call registrants that they
will not receive unwanted telephone solicitations from NASD members.
The Commission believes that the NASD's proposal generally prohibits
its members from making telemarketing calls to people who have
registered on the national do-not-call registry, while retaining time-
of-day and firm-specific do-not-call list restrictions.\45\ The
Commission believes that the proposed rule change, as amended
establishes adequate procedures to prevent members from making
telephone solicitations to do-not-call registrants which should have
the effect of protecting investors, while providing appropriate
exception to the rule for certain enumerated situations, which should
promote just and equitable principles of trade.
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\45\ See proposed NASD Rule 2212(a)(1) and (2).
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B. Exceptions
The Commission recognizes the importance of having certain
exceptions to the general prohibition of NASD members from soliciting
persons who have signed up on the FCC's national do-not-call registry.
The Commission believes that the ``established business relationship''
exception, ``prior express invitation or permission'' exception, and a
``personal relationship'' exception provide appropriate scenarios where
an NASD member should not be precluded from making a telemarketing call
to do-not-call registrants.
The Commission further believes that the NASD's expansion of
``established business relationship'' is appropriate. As originally
drafted, an established business relationship would exist between the
customer and an NASD member as long as the call's recipient had made a
financial transaction with the member within 18 months preceding the
date of the telemarketing call, or if the recipient had contacted the
member to inquire about a product or service offered by the member
within the three months preceding the date of the telemarketing
call.\46\ In response to commenters concerns about the narrowness of
the exception, the NASD expanded the definition of ``established
business relationship'' to include situations where the telemarketing
call recipient has a security position, a money balance, or account
activity at a clearing firm on behalf of such member within the
previous 18 months, and where a member was the ``broker/dealer of
record'' for an account of a person within the 18 months immediately
preceding the date of the telemarketing call.
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\46\ See original proposed NASD Rule 2211(g)(1)(A).
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The Commission believes that an NASD member should be able to
discuss the purchase or sale of a security with a customer who has
registered on the national do-not-call registry without fear of
violating an NASD rule when there is some development that could
materially impact the investment decision of a reasonable investor. As
originally proposed, an established business relationship did not exist
unless an account holder had made a financial transaction within the
previous eighteen months or affirmatively contacted the member to make
an account inquiry within the past three months. The Commission
believes that the definition, as originally proposed, would have
restricted a member from making a telemarketing call to its customer in
many situations where a prudent investor would ordinarily desire to be
contacted, such as the existence of market swings, interest rate
changes, new tax laws, or specific industry or company news. The
Commission believes that the expansion of the definition of
``established business relationship'' exception to include persons that
have a security position, money balance or account activity with a
member or at a clearing firm that provides clearing services on behalf
of a member will, among other things, assist NASD members in upholding
their agency obligations to customers. In addition, the Commission
believes that broker/dealers of record who have served as such for a
customer within the eighteen months preceding the date of the
telemarketing call should be allowed to contact a customer whose
account is held directly at a mutual fund or variable insurance product
issuer.
Moreover, the Commission believes that the proposed established
business relationship exception adequately protects customers who are
most interested in not being contacted by a member by specifying that
the exception does not apply to those individuals who have specifically
requested to be put on a member's do-not-call list. The Commission
further believes a member should not generally be restricted from
contacting those do-not-call registrants from whom the member has
received express written consent to contact and those registrants who
have a personal relationship with the associated person making the
call.
C. Telemarketing Procedures
As described above, the NASD also proposed that its members must
institute certain procedures related to do-not-call lists. \47\ The
Commission believes that the procedures that the NASD has proposed
provide adequate guidelines for a member to establish education and
training of its affiliated persons and adequately provides that a
member will incorporate the names of persons who request to be put on a
firm's do-not-call list among the list of names that a member may not
contact. Further, the Commission believes that the identification
procedure that a member or associated person must follow when making a
telemarketing call should enhance the ability of consumers to hold
members and associated persons accountable for adhering to firm-
specific and national do-not-call registry restrictions.
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\47\ See proposed NASD Rule 2212(d)(1)-(d)(6).
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D. Safe Harbor
As described above, the NASD proposed ``safe harbor'' procedures
that a member could follow to avoid liability for do-not-call list
violations that arise out of errors if the telemarketer's routine
business practice meets certain specified standards.\48\ The Commission
believes that the safe harbor that the NASD has proposed should ensure
that a member incorporates national do-not-call registrants in its own
list of telephone numbers that it may not
[[Page 2805]]
contact, and that members and associated persons follow procedures to
refrain from contacting such persons. Accordingly, the Commission
believes it is appropriate to grant members who have established the
appropriate routine business practices a safe harbor exemption from
liability for calls made out of genuine error.
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\48\ See proposed NASD Rule 2212(c).
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E. Miscellaneous
The Commission believes that the NASD's proposal to apply the
telemarketing and telephone solicitation restrictions to wireless
telephone numbers is appropriate, given that consumers can register
wireless telephone numbers in the national do-not-call registry.
Further, the Commission believes that a member should not be able to
avoid accountability for complying with telemarketing restrictions and
regulations by employing another entity to perform telemarketing
services on behalf of the member. Accordingly, the Commission finds
proposed NASD Rule 2212(f), relating to outsourcing telemarketing, to
be appropriate.
F. Accelerated Approval of Amendment No. 1
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act, for approving Amendment No. 1 prior to the thirtieth day after
the date of publication of notice thereof in the Federal Register. As
discussed above, in Amendment No. 1, the NASD expanded the breadth the
established business relationship exception. The Commission believes
that the proposed Amendment No. 1 will, among other things, facilitate
members' ability to uphold their agency obligations by enabling them to
make a telemarketing call under certain circumstances to customers who
have not actively traded or made deposits to their brokerage accounts.
In making the determination to accelerate approval of Amendment No. 1,
the Commission notes that all five commenters supported a broader
definition of ``established business relationship.''\49\
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\49\ See ACLI Letter, at 3-4; Schwab Letter, at 4; CUNA Letter,
at 2; FSR Letter, at 2-3; SIA Letter, at 4.
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VI. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 1, including whether Amendment No. 1
is consistent with the Act. Persons making written submissions should
file six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments
may also be submitted electronically at the following e-mail address:
rule-comments@sec.gov. All comment letters should refer to File No. SR-
NASD-2003-131. This file number should be included on the subject line
if e-mail is used. To help the Commission process and review your
comments more efficiently, comments should be sent in hardcopy or by e-
mail but not by both methods. Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of the NASD. All
submissions should refer to File No. SR-NASD-2003-131 and should be
submitted by February 10, 2004.
VII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\50\ that the proposed rule change, as amended (File No. SR-NASD-
2003-131) is approved, and Amendment No. 1 is approved on an
accelerated basis.
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\50\ Id.
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\51\
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\51\ 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1079 Filed 1-16-04; 8:45 am]
BILLING CODE 8010-01-P