[Federal Register Volume 68, Number 166 (Wednesday, August 27, 2003)]
[Notices]
[Pages 51609-51613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21940]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48389; File No. SR-MSRB-2003-07]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Municipal Securities Rulemaking Board Relating to 
Proposed Amendments to the MSRB's Telemarketing Rules To Require 
Participation in the National Do-Not-Call Registry

August 21, 2003.
    On August 19, 2003, the Municipal Securities Rulemaking Board 
(``Board'' or ``MSRB'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') a proposed rule change (File No. 
SR-MSRB-2003-07), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change is described in Items I, II, and III below, which 
Items have been prepared by the MSRB. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing herewith a proposed rule change to require 
brokers, dealers and municipal securities dealers to participate in the 
Federal Trade Commission's (``FTC's'') national do-not-call registry. 
The text of the proposed rule change is below. Additions are 
italicized; deletions are bracketed.
* * * * *
Rule G-39. Telemarketing
    [(a) No broker, dealer or municipal securities dealer or person 
associated with a broker, dealer or municipal securities dealer shall:]
    [(i) make outbound telephone calls to the residence of any person 
for the purpose of soliciting the purchase of municipal 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]
    [(ii) make an outbound telephone call to any person for the purpose 
of soliciting the purchase of municipal securities or related services 
without disclosing promptly and in a clear and conspicuous manner to 
the called person the following information:]
    [(A) the identity of the caller and the firm;]
    [(B) the telephone number or address at which the caller may be 
contacted; and]
    [(C) that the purpose of the call is to solicit the purchase of 
municipal securities or related services.]
    [(b) The prohibitions of section (a) shall not apply to telephone 
calls by any person associated with a broker, dealer or municipal 
securities dealer, or another associated person acting at the direction 
of such person for the purpose of maintaining and servicing the 
accounts of existing customers of the broker, dealer or municipal 
securities dealer under the control of or assigned to such associated 
person:]
    [(i) 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 common control of or assigned 
to, such associated person;]
    [(ii) 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]
    [(iii) to a broker, dealer or municipal securities dealer.]
    [For the purposes of section (b), the term ``existing customer'' 
means a customer for whom the broker, dealer or municipal securities 
dealer, or a clearing broker or dealer on behalf of such broker, dealer 
or municipal securities dealer, carries an account. The scope of this 
rule is limited to the telemarketing calls described herein; the terms 
of this rule shall not otherwise expressly or by implication impose on 
brokers, dealers or municipal securities dealers any additional 
requirements with respect to the relationship between a broker, dealer 
or municipal securities dealer and a customer or between a person 
associated with a broker, dealer or municipal securities dealer and a 
customer.]
    (a) General Telemarketing Requirements
    No broker, dealer or municipal securities dealer or person 
associated with a broker, dealer or municipal securities dealer shall 
initiate any telephone solicitation, as defined in paragraph (g)(ii) of 
this rule, to:
    (i) Time of Day Restriction
    Any residence of a person before the hour of 8 a.m. or after 9 p.m. 
(local time at the called party's location), unless
    (A) the broker, dealer or municipal securities dealer has an 
established business relationship with the person pursuant to paragraph 
(g)(i)(A)(1),
    (B) the broker, dealer or municipal securities dealer has received 
that person's prior express invitation or permission, or
    (C) the person called is a broker, dealer or municipal securities 
dealer;

(ii) Firm-Specific Do-Not-Call List

    Any person that previously has stated that he or she does not wish 
to receive an outbound telephone call made by or on behalf of the 
broker, dealer or municipal securities dealer; or

(iii) National Do-Not-Call List

    Any person who has registered his or her telephone number on the 
Federal Trade Commission's national do-not-call registry.

(b) National Do-Not-Call List Exceptions

    A broker, dealer or municipal securities dealer making telephone 
solicitations will not be liable for violating paragraph (a)(iii) if:

(i) Established Business Relationship Exception

    The broker, dealer or municipal securities dealer has an 
established business relationship with the recipient of the call. A 
person's request to be placed on the firm-specific do-not-call list 
terminates the established business relationship exception to that 
national do-not-call list provision for that broker, dealer or 
municipal securities dealer even if the person continues to do business 
with the broker, dealer or municipal securities dealer;

(ii) Prior Express Written Consent Exception

    The broker, dealer or municipal securities dealer has obtained the 
person's prior express invitation or permission. Such permission must 
be evidenced by a signed, written agreement between the person and the 
broker, dealer or municipal securities dealer which states that the 
person agrees to be contacted by the broker, dealer or municipal 
securities dealer and includes the telephone number to which the calls 
may be placed; or

[[Page 51610]]

(iii) Personal Relationship Exception

    The associated person making the call has a personal relationship 
with the recipient of the call.

(c) Safe Harbor Provision

    A broker, dealer or municipal securities dealer or person 
associated with a broker, dealer or municipal securities dealer making 
telephone solicitations will not be liable for violating paragraph 
(a)(iii) if the broker, dealer or municipal securities dealer or person 
associated with a broker, dealer or municipal securities dealer 
demonstrates that the violation is the result of an error and that as 
part of the broker, dealer or municipal securities dealer's routine 
business practice, it meets the following standards:
    (i) Written procedures. The broker, dealer or municipal securities 
dealer has established and implemented written procedures to comply 
with the national do-not-call rules;
    (ii) Training of personnel. The broker, dealer or municipal 
securities dealer has trained its personnel, and any entity assisting 
in its compliance, in procedures established pursuant to the national 
do-not-call rules;
    (iii) Recording. The broker, dealer or municipal securities dealer 
has maintained and recorded a list of telephone numbers that it may not 
contact; and
    (iv) Accessing the national do-not-call database. The broker, 
dealer or municipal securities dealer uses a process to prevent 
telephone solicitations to any telephone number on any list established 
pursuant to the do-not-call rules, employing a version of the national 
do-not-call registry obtained from the administrator of the registry no 
more than three months prior to the date any call is made, and 
maintains records documenting this process.

(d) Procedures

    Prior to engaging in telemarketing, a broker, dealer or municipal 
securities dealer must institute procedures to comply with paragraph 
(a). Such procedures must meet the following minimum standards:
    (i) Written policy. Brokers, dealers and municipal securities 
dealers must have a written policy for maintaining a do-not-call list.
    (ii) Training of personnel engaged in telemarketing. Personnel 
engaged in any aspect of telemarketing must be informed and trained in 
the existence and use of the do-not-call list.
    (iii) Recording, disclosure of do-not-call requests. If a broker, 
dealer or municipal securities dealer receives a request from a person 
not to receive calls from that broker, dealer or municipal securities 
dealer, the broker, dealer or municipal securities dealer must record 
the request and place the person's name, if provided, and telephone 
number on the firm's do-not-call list at the time the request is made. 
Brokers, dealers and municipal securities dealers must honor a person's 
do-not-call request within a reasonable time from the date such request 
is made. This period may not exceed thirty days from the date of such 
request. If such requests are recorded or maintained by a party other 
than the broker, dealer or municipal securities dealer on whose behalf 
the telemarketing call is made, the broker, dealer or municipal 
securities dealer on whose behalf the telemarketing call is made will 
be liable for any failures to honor the do-not-call request.
    (iv) Identification of sellers and telemarketers. A broker, dealer 
or municipal securities dealer or person associated with a broker, 
dealer or municipal securities dealer making a call for telemarketing 
purposes must provide the called party with the name of the individual 
caller, the name of the broker, dealer or municipal securities dealer, 
an address or telephone number at which the broker, dealer or municipal 
securities dealer may be contacted, and that the purpose of the call is 
to solicit the purchase of securities or related service. The telephone 
number provided may not be a 900 number or any other number for which 
charges exceed local or long distance transmission charges.
    (v) Affiliated persons or entities. In the absence of a specific 
request by the person to the contrary, a person's do-not-call request 
shall apply to the broker, dealer or municipal securities dealer making 
the call, and will not apply to affiliated entities unless the consumer 
reasonably would expect them to be included given the identification of 
the caller and the product being advertised.
    (vi) Maintenance of do-not-call lists. A broker, dealer or 
municipal securities dealer making calls for telemarketing purposes 
must maintain a record of a caller's request not to receive further 
telemarketing calls. A firm-specific do-not-call request must be 
honored for five years from the time the request is made.

(e) Wireless Communications

    The provisions set forth in this rule are applicable to brokers, 
dealers and municipal securities dealers telemarketing or making 
telephone solicitations calls to wireless telephone numbers.

(f) Outsourcing Telemarketing

    If a broker, dealer or municipal securities dealer uses another 
entity to perform telemarketing services on its behalf, the broker, 
dealer or municipal securities dealer remains responsible for ensuring 
compliance with all provisions contained in this rule.

(g) Definitions

    (i) Established business relationship.
    (A) An established business relationship exists between a broker, 
dealer or municipal securities dealer and a person if:
    (1) the person has made a financial transaction with the broker, 
dealer or municipal securities dealer within the previous eighteen 
months immediately preceding the date of the telemarketing call; or
    (2) the person has contacted the broker, dealer or municipal 
securities dealer to inquire about a product or service offered by the 
broker, dealer or municipal securities dealer within the previous three 
months immediately preceding the date of the telemarketing call.
    (B) A person's established business relationship with a broker, 
dealer or municipal securities dealer does not extend to the broker, 
dealer or municipal securities dealer's affiliated entities unless the 
person would reasonably expect them to be included. Similarly, a 
person's established business relationship with a broker, dealer or 
municipal securities dealer's affiliate does not extend to the broker, 
dealer or municipal securities dealer unless the person would 
reasonably expect the broker, dealer or municipal securities dealer to 
be included.
    (ii) The terms telemarketing and telephone solicitation mean 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.
    (iii) The term personal relationship means any family member, 
friend, or acquaintance of the telemarketer making the call.
Rule G-8. Books and Records to be Made by Brokers, Dealers and 
Municipal Securities Dealers
    (a) Description of Books and Records Required to be Made. Except as 
otherwise specifically indicated in this rule, every broker, dealer and 
municipal securities dealer shall make and keep current the following 
books and records, to the extent applicable to the business of such 
broker, dealer or municipal securities dealer:

[[Page 51611]]

    (i)-(xviii) No change.
    (xix) [Telemarketing Requirements] Negotiable Instruments Drawn 
From a Customer's Account
    [(A) Each broker, dealer and municipal securities dealer shall make 
and maintain a centralized do-not-call list of persons who do not wish 
to receive telephone solicitations from such broker, dealer or 
municipal securities dealer or its associated persons.]
    [(B)] No broker, dealer or municipal securities dealer or person 
associated with such broker, dealer or municipal securities dealer 
shall 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.
    (xx)-(xxii) No change.
    (b)-(g) No change.
* * * * *

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

    In its filing with the SEC, the MSRB 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 texts of these 
statements may be examined at the places specified in Item IV below. 
The MSRB has 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

1. Purpose
Background
    Earlier this year, both the FTC and the Federal Communications 
Commission (``FCC'') established requirements for sellers and 
telemarketers to participate in a national do-not-call registry. 
Beginning in June 2003, consumers have been able to enter their home 
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. The FCC's rules are directly applicable to broker/
dealers.
    The national do-not-call registry is not the FCC's or FTC's first 
foray into regulating telemarketing. In 1992 and 1995, the FCC and FTC 
developed requirements for firms to maintain do-not-call lists and to 
limit the hours of telephone solicitations. The MSRB adopted 
substantially similar rules in 1996.\3\ On July 2, 2003, the SEC 
requested that the MSRB amend its telemarketing rules to include a 
requirement for dealers to participate in the national do-not-call 
registry.\4\
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    \3\ See Release No. 34-38053 (Dec. 16, 1996), 61 FR 68078 (Dec. 
26, 1996) (approving MSRB rule requiring brokers, dealers and 
municipal securities dealers (``dealers'') to maintain firm-specific 
do-not-call lists and creating telemarketing time-of-day 
restrictions and disclosure provisions).
    \4\ The Telemarketing and Consumer Fraud and Abuse Prevention 
Act of 1994 requires the SEC to promulgate telemarketing rules 
substantially similar to those of the FTC or direct self-regulatory 
organizations to do so, unless the SEC determines that such rules 
are not in the interest of investor protection. 47 U.S.C. 6102(d) 
(2003).
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    In this proposed rule change, the MSRB is amending its rules to 
implement the national do-not-call registry. Because broker/dealers and 
banks are subject to the FCC's jurisdiction, the MSRB modeled its rules 
after the FCC, with minor modifications tailoring the rules to broker/
dealers and the securities industry.\5\
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    \5\ Substantively, the Rules of the FCC and FTC are very 
similar. Indeed, Congress has asked the FCC to consult with the FTC 
to maximize consistency between their respective do-not-call rules. 
See The Do-Not-Call Implementation Act, 108 Pub. L. 10, 117 Stat. 
557 (Mar. 11, 2003).
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General Telemarketing Requirements
    Paragraph (a)(i) of the proposed rule change provides the time-of-
day restrictions under which a dealer or person associated with a 
dealer may make outbound telephone calls to the residence of any person 
for the purpose of soliciting the purchase of securities or related 
services. Specifically, dealers may engage in such telephone 
solicitations only between the hours of 8 a.m. to 9 p.m. (local time at 
the called party's location) unless the dealer has an established 
business relationship with the called person based upon a financial 
transaction with the dealer, the dealer has received express written 
permission from the person which allows the dealer to call outside the 
applicable time frame, or the person called is a broker, dealer or 
municipal securities dealer. These provisions are substantively 
equivalent to those currently in Rule G-39, except that the MSRB is 
replacing the current existing customer exception with the established 
business relationship exception. This change is discussed in detail 
below.
    Paragraph (a)(ii) provides the requirement for firms to maintain a 
firm-specific do-not-call list.\6\ The MSRB originally established the 
requirement for firms to maintain their own do-not-call lists in 1996. 
The new federal legislation imposes the additional requirement for 
firms to consult the national do-not-call registry; it does not 
eliminate the obligation for firms to maintain their own do-not-call 
lists. The provisions in paragraph (a)(ii) are substantively equivalent 
to those in current Rule G-8(a)(xix)(A). Dealers should note that under 
proposed paragraph (d)(iii), they must honor a request by a person to 
be placed on a firm-specific do-not-call list within thirty days, or 
sooner if they are able to do so.
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    \6\ MSRB Rule G-8(a)(xix)(A) currently requires firms to 
maintain firm-specific do-not-call lists. In an effort to 
consolidate and clarify the MSRB's telemarketing rules, the MSRB is 
proposing to combine Rule G-8(a)(xix)(A) with its main telemarketing 
rule, Rule G-39. The remaining section of Rule G-8(a)(xix) is 
substantively unchanged.
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    Paragraph (a)(iii) prohibits a dealer or person associated with a 
dealer from making telephone solicitations to any person who registers 
his or her phone number on the national do-not-call registry. Dealers 
should note that such registrations are maintained in the national 
registry for a period of five years. A consumer may re-register his or 
her telephone number at any time. This re-registration re-commences the 
applicable five-year registration.

Exceptions

    The rules of the FCC and FTC provide several exceptions under which 
sellers and telemarketers may make telephone solicitations to persons 
on the national registry.\7\ The MSRB has adopted these exceptions.
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    \7\ The FTC rule only contains two exceptions: (1) Prior express 
written consent; and (2) an established business relationship. The 
FTC rule, unlike the FCC rule, does not include a personal 
relationship exception.
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    The first exception, contained in paragraph (b)(i), is for calls 
made to persons with whom the dealer has an ``established business 
relationship.'' An established business relationship may be formed in 
two ways. First, under paragraph (g)(i)(A)(1), an established business 
relationship exists between a dealer and a person if such person has 
made a financial transaction with the dealer within the previous 
eighteen months immediately preceding the date of the telemarketing 
call. Second, under paragraph (g)(i)(A)(2), an established business 
relationship arises if a person has contacted the dealer to inquire 
about a product or service offered by the

[[Page 51612]]

dealer within the previous three months immediately preceding the date 
of the telemarketing call.
    The definition of established business relationship replaces the 
definition of ``existing customer,'' which was applicable solely to the 
time-of-day restriction and disclosure provisions in current Rule G-39. 
The MSRB believes that requiring dealers to follow separate definitions 
of existing customer and established business relationship would lead 
to confusion and inadvertent violations. We note that the proposed 
definition of ``established business relationship'' is generally 
broader than the MSRB's definition of existing customer in that it 
looks back eighteen months rather than twelve months to see whether a 
consumer made a financial transaction. In addition, an established 
business relationship may be established by a person inquiring about a 
product or service from the dealer within the previous three months. 
The MSRB proposes, however, that time-of-day restrictions should not be 
waived solely because a person inquired about a product or service 
within the past three months. Thus, for purposes of the time-of-day 
restrictions in paragraph (a)(i), an established business relationship 
must exist based upon a financial transaction as specified in paragraph 
(g)(i)(A)(1).
    In addition, for purposes of paragraph (g)(i)(A)(1), the MSRB 
proposes interpreting the term ``financial transaction'' to mean that a 
person has effected a securities transaction or deposited funds or 
securities with the broker, dealer or municipal securities dealer. The 
MSRB does not believe that under the FCC's or FTC's definitions of 
established business relationship,\8\ the receipt of interest or 
dividends would constitute a financial transaction. We note that this 
is a distinction from current Rule G-39(b)(ii), under which a person 
could be an existing customer solely on the basis of interest or 
dividend income. However, because dealers are subject to FCC rules, we 
have sought to harmonize MSRB standards with those of the FCC. We also 
believe that consumers generally would not view receiving interest or 
dividends as sufficient to overcome their expectation that entering 
their telephone number in the national do-not-call registry will 
curtail telephone solicitations.
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    \8\ The FCC's definition of established business relationship 
requires a person's ``purchase or transaction with the entity.'' FCC 
Report 03-153 (July 3, 2003). The FTC's definition is substantially 
similar and states that the established business relationship may be 
formed by the consumer's purchase, rental, or lease of the seller's 
goods or services or a financial transaction between the consumer 
and seller. 68 FR 4580, 4669 (Jan. 29, 2003).
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    A person's request to be placed on a firm-specific do-not-call list 
terminates the established business relationship exception. Thus, a 
dealer or person associated with a dealer may not make telephone 
solicitations to a person with whom it has an established business 
relationship if such person requests to be placed on the dealer's do-
not-call list. This is consistent with the MSRB's current do-not-call 
provisions, which do not contain any exemption for existing customers. 
Nothing in this section prohibits a dealer from contacting a customer 
concerning the administration of his or her account. Such calls are not 
telephone solicitation or telemarketing and are not precluded under 
existing MSRB rules or the proposed rule change.
    The second exception to the national do-not-call rules, contained 
in paragraph (b)(ii), is for calls to persons from whom the dealer has 
obtained prior express invitation or permission. In accordance with the 
requirements of the FCC and FTC, permission must be evidenced by a 
signed, written agreement between the dealer and person that 
specifically states that the person agrees to be contacted by the 
dealer. The agreement also must include the telephone number to which 
calls may be placed.
    The third exception, in paragraph (b)(iii), is for calls made by an 
associated person who has a personal relationship with the recipient. 
The definition of personal relationship is in paragraph (g)(iii) and 
means ``any family member, friend, or acquaintance of the telemarketer 
making the call.'' The FCC has indicated that in determining whether a 
telemarketer is a friend or acquaintance of the consumer, the FCC will 
look at, among other things, whether a reasonable consumer would expect 
a call from such persons because they have a close, or, at least, a 
firsthand relationship. Dealers and persons associated with a dealer 
also should be aware that this exception applies solely to the national 
do-not-call registry. Thus, if a person with whom an associated person 
has a personal relationship has requested to be placed on a firm's do-
not-call list, the associated person may not make a telephone 
solicitation to such person.

Safe Harbor Provision

    The FCC and FTC rules also contain a ``safe harbor'' under which a 
person will not be liable for a violation that is the result of error 
if the telemarketer's routine business practice meets certain specified 
standards. The safe harbor is established in paragraph (c) and applies 
only to a violation of paragraph (a)(iii), the national do-not-call 
registry provision. To be eligible for this safe harbor, a dealer or 
person associated with a dealer must demonstrate that the dealer's 
routine business practice meets the following four standards. First, 
the dealer has established and implemented written procedures to comply 
with the national do-not-call rules. Second, the dealer has trained its 
personnel, and any entity assisting in its compliance, in procedures 
established pursuant to the national do-not-call rules. Third, the 
dealer has maintained and recorded a list of telephone numbers that the 
dealer may not contact. Fourth, the dealer uses a process to prevent 
telephone solicitations to any telephone number on any list established 
pursuant to the do-not-call rules, employing a version of the national 
do-not-call registry obtained from the FTC no more than three months 
prior to the date any call is made, and maintains records documenting 
this process.\9\
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    \9\ We note that under the rules of the FCC, the safe harbor 
contains an additional requirement that a seller or telemarketer use 
a process to ensure that it does not sell, rent, lease, purchase or 
use the national do-not-call database, or any part thereof, for any 
purpose except compliance with the FCC's national do-not-call rules 
and any such state or federal law to prevent telephone solicitations 
to telephone numbers registered on the national database. The 
telemarketer also must purchase access to the relevant do-not-call 
data from the administrator of the national database and must not 
participate in any arrangement to share the cost of accessing the 
national database, including any arrangement with other entities to 
divide the costs to access the national database among various 
client sellers.
    The FTC will collect fees from sellers and telemarketers to fund 
the ongoing expenses of the national registry. The annual cost of 
accessing the FTC's national registry has been set at $25 per area 
code, with a maximum annual cap of $7,375 (equivalent to 300 area 
codes). See 68 FR 45134, 45141 (July 31, 2003). In addition, as part 
of the FTC's Regulatory Flexibility analysis on the burdens to small 
entities, the FTC determined that it would not charge an access fee 
for the first five area codes.
    Although the MSRB's proposed safe harbor does not contain 
provisions concerning the sale, rent, lease, purchase, use, or means 
of accessing the national do-not-call registry as such matters 
generally fall outside the purview of the investor protection 
concerns underlying the proposed rule change, dealers are subject to 
the FCC's national do-not-call rules and must nevertheless comply 
with these provisions or risk administrative action by the FCC.
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Telemarketing Procedures

    Paragraph (d) tracks the requirements of the FCC rule and existing 
Rule G-39 in establishing procedures that dealer firms must institute 
prior to engaging in telemarketing. These procedures include 
requirements to: (1) Have a written policy for maintaining a do-not-
call list; (2) train personnel engaged in

[[Page 51613]]

telemarketing in the existence and use of the do-not-call list; (3) 
record and disclose requests from a person to be added to the dealer's 
do-not-call list; and (4) have the dealer provide the called party with 
the name of the individual caller, the name of the dealer, a telephone 
number or address at which the dealer may be contacted, and that the 
purpose of the call is to solicit the purchase of securities or related 
services.
    Paragraph (d)(v) contains the FCC's position with respect to 
affiliated persons or entities. In general, a person's do-not-call 
request applies only to the entity making the call, and does not apply 
to any affiliated entity unless the customer reasonably would expect 
the affiliated entity to be included given the identification of the 
caller and the product being advertised. Similarly, the established 
business relationship exception does not extend to the dealer's 
affiliated entities unless the customer reasonably would expect the 
dealer to be included.
    Paragraph (d)(vi) explains that dealers must maintain a record of a 
caller's request not to receive further telemarketing calls and must 
honor that request for a period of five years.

Miscellaneous Provisions

    Paragraph (e) tracks the FCC's position with respect to the 
application of the proposed rule change to wireless telephone numbers. 
In general, the FCC has stated that wireless subscribers may 
participate in the national do-not-call registry. Although FCC 
telemarketing rules only generally apply to residential telephone 
subscribers, the FCC has stated that it will presume wireless 
subscribers who ask to be put on the national do-not-call list are 
residential subscribers. Such a presumption, however, may require a 
complaining wireless customer to provide further proof of the validity 
of that presumption should it need to take enforcement action. The MSRB 
agrees with this interpretation and, consistent with the FCC, will 
apply its telemarketing provisions to dealers engaging in telephone 
solicitations with wireless subscribers.
    Paragraph (f) provides that, if a dealer uses another entity to 
perform telemarketing services on its behalf, the dealer remains 
responsible for ensuring compliance with all provisions contained in 
this proposed rule. Dealers also should be mindful of the limitations 
on the use of unregistered persons to perform telemarketing services.
2. Basis
    The MSRB believes the proposed rule change is consistent with 
section 15B(b)(2)(C) of the Act, which provides that the Board's rules 
shall:

Be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade* * *to 
remove impediments to and perfect the mechanism of a free and open 
market in municipal securities, and, in general, to protect 
investors and the public interest.


The MSRB believes that the proposed rule change is consistent with the 
Act in that investors will expect that their participation in the 
national do-not-call registry will, subject to certain limited 
exceptions, preclude telephone solicitations by broker/dealers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe that the proposed rule change would 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act, since it would apply equally to 
all brokers, dealers and municipal securities dealers.

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

    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, including whether the proposed rule 
change 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. 
Copies of the submissions, 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 the filing will also be 
available for inspection and copying at the Board's principal offices. 
All submissions should refer to File No. SR-MSRB-2003-07 and should be 
submitted by September 17, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-21940 Filed 8-26-03; 8:45 am]
BILLING CODE 8010-01-P