[Federal Register Volume 60, Number 88 (Monday, May 8, 1995)]
[Notices]
[Pages 22592-22593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11190]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35657; File No. SR-NASD-95-13]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by National Association of Securities Dealers, Inc., Relating to 
Cold Calling Requirements

May 1, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April 
10, 1995, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. The Commission is publishing this notice to 
[[Page 22593]] solicit comments on the proposed rule change from 
interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD is herewith filing a proposed rule change to Article III, 
Section 21 of the Rules of Fair Practice. Proposed new language is 
italicized.

Books and Records

Sec. 21.
* * * * *

Cold Call Requirements

    (g) Each member shall 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.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the NASD included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The NASD had prepared summaries, set forth in Sections 
(A), (B), and (C) below, of the most significant aspects of such 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Pursuant to the Telephone Consumer Protection Act (TCPA), which 
became law in 1991, the Federal Communications Commission (FCC) 
developed rules, effective December 20, 1992, to protect the rights of 
telephone consumers while allowing legitimate telemarketing practices. 
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 (12) months.
    Members who engage in telephone solicitation to market their 
products and services are subject to the requirements of the rules of 
the FCC and FTC relating to telemarketing practices and the rights of 
telephone consumers and shall refer to FCC rules for specific 
restrictions on telephone solicitations. This includes, but is not 
limited to, the requirements to make and maintain a list of persons who 
do not want to receive telephone solicitations (a ``do-not-call'' 
list).
    The Prevention Act also requires the SEC to engage in its own 
additional rulemaking, or, alternatively, to require the SROs to 
promulgate telemarketing rules consistent with the legislation. In 
August of 1994, SEC Chairman Arthur Levitt wrote to the NASD and NYSE 
urging the SROs to adopt a rule similar to the cold calling rule 
established by the FCC. Since then, there have been ongoing discussions 
between the SEC and SROs on the structure of a rule or rules to apply 
pursuant to the Prevention Act. As a first step, the NASD is proposing 
to adopt a rule to implement that portion of the FCC rules that 
requires the establishment and maintenance of a do-not-call list. The 
proposed rule would add new Subsection (g) to Section 21 of Article III 
of the Rules of Fair Practice to require that each member who engages 
in telephone solicitation to market its products and services shall 
make and maintain a centralized do-not-call list of persons who do not 
wish to receive telephone solicitations from such member of its 
associated persons.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(6) of the Act,\1\ which require that 
the Association adopt and amend its rules to promote just and equitable 
principles of trade, and generally provide for the protection of 
customers and the public interest in that the proposed rule change 
establishes minimum standards designed to protect members' customers 
against abusive telemarketing practices.

    \1\15 U.S.C. 78o-3.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The NASD does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, D.C. 20549. 
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 will also be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to file number SR-NASD-95-13 and 
should be submitted by May 30, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\2\

    \2\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-11190 Filed 5-5-95; 8:45 am]
BILLING CODE 8010-01-M