[Federal Register Volume 60, Number 115 (Thursday, June 15, 1995)]
[Notices]
[Pages 31527-31528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14687]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35831; File No. SR-NASD-95-13]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by National Association of Securities Dealers, Inc., Relating to
Cold Calling Requirements
June 9, 1995.
On April 10, 1995, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') filed a proposed rule change with
the Securities and Exchange Commission (``SEC'' or ``Commission'')
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule [[Page 31528]] 19b-4 thereunder.\2\ The proposed
rule change amends Article III, Section 21 of the Rules of Fair
Practice\3\ to include a provision relating to cold calling. Under the
rule as amended, each member who engages in telephone solicitation to
market its products and services will be required to 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.
\1\15 U.S.C. 78s(b)(1).
\2\17 CFR 240.19b-4.
\3\NASD Manual, Rules of Fair Practice, Article III, Sec. 21,
(CCH) para.2171.
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Notice of the proposed rule change, together with its terms of
substance, was provided by issuance of a Commission release\4\ and by
publication in the Federal Register.\5\ This order approves the
proposed rule change.
\4\Securities Exchange Act Release No. 35657 (May 1, 1995).
\5\60 FR 22529 (May 8, 1995).
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Pursuant to the Telephone Consumer Protection Act (``TCPA''), which
became law in 1991, the Federal Communications Commission (``FCC'')
developed rules to protect the rights of telephone consumers while
allowing legitimate telemarketing practices. The FCC rules include a
requirement that a person or entity making telephone solicitations must
maintain a do-not-call list.
In addition, the Telemarketing and Consumer Fraud and Abuse
Prevention Act (``Prevention Act'') became law in August 1994, and
requires the Federal Trade Commission (``FTC'') to adopt rules on
abusive cold calling within twelve months. The Prevention Act also
requires the SEC to engage in its own rulemaking or, alternatively, to
require the self-regulatory organizations (``SROs'') to promulgate
telemarketing rules consistent with the legislation.
In August 1994, SEC Chairman Arthur Levitt wrote a letter urging
the NASD and the other SROs to adopt rules similar to the cold calling
rule established by the FCC. Since then, there have been ongoing
discussions between the Commission and SROs on the structure of a rule
or rules to apply pursuant to the Prevention Act.
The Commission has determined to approve the NASD's proposal. The
Commission believes that the rule change is a good first step in the
effort to protect against abusive cold calling. In fact, the Commission
has recently approved a substantially similar proposal filed by the New
York Stock Exchange.\6\ The Commission believes that the proposed rule
change is consistent with the Prevention Act as well as the FCC rules
concerning restrictions on telephone solicitations.
\6\Securities Exchange Act Release No. 35821 (June 7, 1995).
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The Commission finds that the rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to the NASD, including the requirements of Section 15A(b)(6)
of the Act.\7\ Section 15A(b)(6) requires, in part, that the rules of a
national securities association be designed to prevent fraudulent and
manipulative acts and practices; to promote just and equitable
principles of trade; and, in general, to provide for the protection of
customers and the public interest. The proposed rule change addresses
the practices of members that make telemarketing calls. Members will be
required to maintain centralized do-not-call lists. The maintenance of
such lists is a first step toward establishing standards designed to
protect persons against abusive telemarketing practices.
\7\15 U.S.C. 78o-3(b)(6).
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It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change SR-NASD-95-13 be, and hereby is,
approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-14687 Filed 6-14-95; 8:45 am]
BILLING CODE 8010-01-M
