[Federal Register Volume 70, Number 73 (Monday, April 18, 2005)]
[Notices]
[Pages 20196-20198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1804]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51533; File No. SR-MSRB-2005-06]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Frequency of Updates from the National Do-Not-Call 
Registry Pursuant to Rule G-39

April 12, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 23, 2005, the Municipal Securities Rulemaking Board (``MSRB'' 
or ``Board''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the MSRB. The 
MSRB has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders the proposal effective upon filing 
with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing with the Commission a proposed rule change 
amending Rule G-39, on telemarketing, to require a broker, dealer or 
municipal securities dealer that seeks to qualify for the safe harbor 
set forth in Rule G-39 to, among other things, use a process to prevent 
telephone solicitations to any telephone number in a version of the 
national do-not-call registry obtained from the administrator of the 
registry no more than thirty-one (31) days prior to the date any call 
is made. This proposed amendment is consistent with recent amendments 
to the comparable do-not-call rules of the Federal Trade Commission 
(``FTC'') and the Federal Communications Commission (``FCC''). The 
proposed rule change will become effective on May 1, 2005. The text of 
the proposed rule change is available on the MSRB's Web site (http://www.msrb.org), at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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 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 
text 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
    In 2003, the FTC, via its Telemarketing Sales Rule, and the FCC, 
via its Miscellaneous Rules Relating to Common Carriers, established 
requirements for sellers and telemarketers to participate in a national 
do-not-call registry.\5\ Since 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 do-not-call rules apply to 
brokers, dealers and municipal securities dealers while the FTC's rules 
do not.\6\
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    \5\ The do-not-call rules of the FCC and FTC are very similar in 
terms of substance, in part, because Congress directed 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 P.L. 10, 117 Stat. 557 (Mar. 11, 2003).
    \6\ See 15 U.S.C. Sec.  6102(d)(2)(A), which provides that ``The 
rules promulgated by the Federal Trade Commission under subsection 
(a) shall not apply to * * *[among other persons, brokers or 
dealers] * * *'' The FTC's do-not-call rules were promulgated under 
15 U.S.C. Sec.  6102. The FCC's rules are not subject to this 
limitation and apply to all sellers and telemarketers.

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[[Page 20197]]

    In July 2003, the SEC requested that the MSRB amend its 
telemarketing rules to require brokers, dealers and municipal 
securities dealers to participate in the national do-not-call 
registry.\7\ Because brokers, dealers and municipal securities dealers 
are subject to the FCC's do-not-call rules, the MSRB modeled its rules 
in this area after those of the FCC and codified these do-not-call 
requirements in Rule G-39, with minor modifications tailoring the rules 
to broker, dealer and municipal securities dealer activities and the 
securities industry. The SEC approved these rules in January 2004.\8\
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    \7\ The Telemarketing and Consumer Fraud and Abuse Prevention 
Act of 1994 (codified at 15 U.S.C. Sec.  6102) requires the SEC to 
promulgate telemarketing rules substantially similar to those of the 
FTC or to direct self-regulatory organizations to promulgate such 
rules unless the SEC determines that such rules are not in the 
interest of investor protection.
    \8\ Exchange Act Release No. 49127 (January 26, 2004); 69 FR 
4548 (January 30, 2004).
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Safe Harbor Provision for the National Do-Not-Call Registry 
Requirements
    The FCC and FTC each provided persons subject to their respective 
do-not-call rules a ``safe harbor'' providing that a seller or 
telemarketer is not liable for a violation of the do-not-call rules 
that is the result of an error if the seller or telemarketer's routine 
business practice meets certain specified standards. The MSRB has 
provided a parallel safe harbor in paragraph (c) of Rule G-39; this 
safe harbor is limited to a violation of subparagraph (a)(iii) of Rule 
G-39, which prohibits initiating any telephone solicitation to any 
person who has registered his or her telephone number with the national 
do-not-call registry.
    Today, to be eligible for this Rule G-39 safe harbor, a broker, 
dealer or municipal securities dealer or person associated with a 
broker, dealer or municipal securities dealer must demonstrate that the 
broker, dealer or municipal securities dealer's routine business 
practice meets four standards. First, the broker, dealer or municipal 
securities dealer must have established and implemented written 
procedures to comply with the national do-not-call rules. Second, the 
broker, dealer or municipal securities dealer must have trained its 
personnel, and any entity assisting it in its compliance, in procedures 
established pursuant to the national do-not-call rules. Third, the 
broker, dealer, or municipal securities dealer must have maintained and 
recorded a list of telephone numbers that the broker, dealer or 
municipal securities dealer may not contact. Fourth, the broker, dealer 
or municipal securities dealer must use 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 must maintain records documenting this 
process.
    Shortly after the MSRB's rules were approved, Congress instructed 
the FTC to amend it telemarketing rules to require use of a national 
do-not-call registry no more than thirty-one days old.\9\ Accordingly, 
in March 2004, the FTC amended its Telemarketing Sales Rule to require 
sellers and telemarketers seeking to qualify for the FTC's do-not-call 
safe harbor to use a version of the national do-not-call registry 
obtained from the FTC no more than thirty-one days prior to the date 
any call is made. In August 2004, the FCC adopted a conforming 
amendment to its Miscellaneous Rules Relating to Common Carriers, 
requiring that persons who seek to qualify for a similar safe harbor 
provided in the rule use a version of the national do-not-call registry 
obtained from the administrator of the national do-not-call registry 
(i.e., the FTC) no more than thirty-one days prior to the date any call 
is made.\10\ The FTC and FCC rule amendments took effect on January 1, 
2005.
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    \9\ 69 FR 16368 (Mar. 29, 2004). The FTC indicated that it was 
directed to amend its rules by Congress in the Consolidated 
Appropriations Act of 2004, Pub. L. 108-199, 188 Stat 3 (requirement 
in Division B, Title V).
    \10\ 69 FR 60311 (Oct. 8, 2004); CG Docket No. 02-278, FCC 04-
204 (adopted Aug. 25, 2004; released Sept. 21, 2004). The FCC 
indicated that while Congress did not direct the FCC to amend its 
do-not-call rule, it determined to do so, in part, because it is 
required to consult and coordinate with the FTC with respect to, and 
maximize the consistency of, their respective do-not-call rules. 69 
FR 60313.
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    The MSRB is proposing to amend Rule G-39 to conform to this change 
in the rules of the FTC and FCC. The MSRB believes that this change is 
necessary to maintain the consistency between the telemarketing rules 
of the MSRB and the FTC and FCC (particularly given that the FCC's 
rules already directly apply to broker-dealers), and that investors 
generally expect the MSRB's telemarketing standards to be comparable to 
those of the FTC and FCC. Additionally, under the Telemarketing and 
Consumer Fraud and Abuse Prevention Act of 1994, the SEC has requested 
that the MSRB amend its do-not-call rules to conform to the recent 
amendments to the FTC's do-not-call rules.
    The MSRB's proposed rule change would take effect on May 1, 2005. 
Accordingly, under the proposed rule change, effective May 1, 2005, a 
broker, dealer or municipal securities dealer seeking to qualify for 
the safe harbor in Rule G-39 would be required to use a process to 
prevent telephone solicitations to any telephone number in a version of 
the national do-not-call registry obtained from the administrator of 
the registry (i.e., the FTC) no more than thirty-one days prior to the 
date any call is made.
2.Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\11\ which provides that MSRB rules 
shall:
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    \11\ 15 U.S.C. 78o-4(b)(2)(C).

    Be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities, to remove 
impediments to and perfect the mechanism of a free and open market 
in municipal securities, and, in general, to protect investors and 
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the public interest * * *

    The MSRB believes that the proposed rule change will increase the 
protection of investors by enabling investors who do not want to 
receive telephone solicitations to receive the benefits and protections 
of the national do-not-call registry sooner.

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

    The MSRB does not believe that the proposed rule change will result 
in any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act since it would apply equally to 
all dealers.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days from March 23, 2005, the date on

[[Page 20198]]

which it was filed, and the MSRB provided the Commission with written 
notice of its intent to file the proposed rule change at least five 
business days prior to the filing date, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and 
Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.\14\
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    \14\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-MSRB-2005-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-MSRB-2005-06. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 MSRB. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-MSRB-2005-06 and should be submitted on or before May 9, 
2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1804 Filed 4-15-05; 8:45 am]
BILLING CODE 8010-01-P