Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Telemarketing, 72477-72480 [E5-6828]
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Federal Register / Vol. 70, No. 232 / Monday, December 5, 2005 / Notices
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items. For further
information and to ascertain what, if
any, matters have been added, deleted
or postponed, please contact the Office
of the Secretary at (202) 942–7070.
proposed rule change is set forth below.
Italics indicate new text.
Dated: December 1, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–23687 Filed 12–1–05; 3:50 pm]
No member or member organization,
or person associated with a member or
member organization shall initiate any
telephone solicitation, as defined in
paragraph (g)(2) of this rule, to:
BILLING CODE 8010–01–P
Telemarketing
Rule 429.
(a) General Telemarketing Requirements
(1) Time of Day Restriction
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52844; File No. SR–Amex–
2005–064]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to Telemarketing
November 28, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1
(‘‘Exchange Act’’) and Rule 19b–4
thereunder,2 notice is hereby given that
on June 14, 2005, the American Stock
Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
On September 23, 2005, the Amex filed
Amendment No. 1 to the proposed rule
change.3 On November 15, 2005, the
Amex filed Amendment No. 2 to the
proposed rule change.4 The Commission
is publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
Amex Rule 429 (‘‘Telemarketing’’) to
require Amex members and member
organizations to participate in the
National Do-Not-Call Registry
maintained by the Federal Trade
Commission (‘‘FTC’’) and to follow
applicable regulations of the Federal
Communications Commission (‘‘FCC’’).
The current text of Amex Rule 429
would be deleted. The text of the
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Amex partially
amended the text of proposed amended Amex Rule
429 and made conforming and technical changes to
the original filing.
4 In Amendment No. 2, the Amex made
additional changes to the text of proposed amended
Amex Rule 429 and to the original filing.
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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 member has an established
business relationship with the person
pursuant to paragraph (g)(1)(A),
(B) the member has received that
person’s prior express invitation or
permission, or
(C) the person called is a broker or
dealer;
(2) 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 member; or
(3) National Do-Not-Call List
Any person who has registered his or
her telephone number on the Federal
Trade Commission’s national do-notcall registry.
(b) National Do-Not-Call List Exceptions
A member making telephone
solicitations will not be liable for
violating paragraph (a)(3) if:
(1) Established Business Relationship
Exception
The member 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
member even if the person continues to
do business with that member;
(2) Prior Express Written Consent
Exception
The member 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
member which states that the person
agrees to be contacted by the member
and includes the telephone number to
which the calls may be placed; or
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(3) Personal Relationship Exception
The associated person making the call
has a personal relationship with the
recipient of the call.
(c) Safe Harbor Provision
A member or person associated with
a member making telephone
solicitations will not be liable for
violating paragraph (a)(3) if the member
or person associated with the member
demonstrates that the violation is the
result of an error and that as part of the
member’s routine business practice, it
meets the following standards:
(1) Written procedures. The member
has established and implemented
written procedures to comply with the
national do-not-call rules;
(2) Training of personnel. The
member has trained its personnel and
any entity assisting in its compliance, in
procedures established pursuant to the
national do-not-call rules;
(3) Recording. The member has
maintained and recorded a list of
telephone numbers that it may not
contact; and
(4) Accessing the national do-not-call
database. The member 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 thirty-one (31) days prior to
the date any call is made, and
maintains records documenting this
process.
(d) Procedures
Prior to engaging in telemarketing, a
member must institute procedures to
comply with paragraph (a). Such
procedures must meet the following
minimum standards:
(1) Written policy. Members must
have a written policy for maintaining a
do-not-call list.
(2) 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.
(3) Recording, honoring of do-not-call
requests. If a member receives a request
from a person not to receive calls from
that member, the member 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. Members
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
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Federal Register / Vol. 70, No. 232 / Monday, December 5, 2005 / Notices
are being recorded or maintained by a
party other than the member on whose
behalf the telemarketing call is made,
the member on whose behalf the
telemarketing call is made will be liable
for any failure to honor the do not call
request.
(4) Identification of sellers and
telemarketers. A member or person
associated with a member making a call
for telemarketing purposes must provide
the called party with the name of the
individual caller, the name of the
member, an address or telephone
number at which the member 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.
(5) Affiliated persons or entities. In
the absence of a specific request by the
person to the contrary, a person’s donot-call request shall apply to the
member 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.
(6) Maintenance of do-not-call lists. A
member making calls for telemarketing
purposes must maintain a record of the
caller’s request not to receive further
telemarketing calls. A firm specific donot-call request must be honored for five
(5) years from the time the request is
made.
(e) Wireless Communications
The provisions set forth in this rule
are applicable to members
telemarketing or making telephone
solicitations calls to wireless telephone
numbers.
(f) Outsourcing Telemarketing
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 this rule.
(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 within the previous
eighteen months immediately preceding
the date of the telemarketing call;
(ii) The member is the broker/dealer
of record for an account of the person
within the previous 18 months
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immediately preceding the date of the
telemarketing call; or
(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) 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.
(3) The term ‘‘personal relationship’’
means any family member, friend, or
acquaintance of the telemarketer
making the call.
(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. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Amex 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 Exchange 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Frm 00057
Background
In 1992 and 1995, the FCC and the
FTC established regulations requiring
firms to maintain do-not-call lists and to
limit the hours of telephone
solicitations. The Telemarketing and
Consumer Fraud Abuse Prevention Act
of 1994 (the ‘‘Telemarketing Act’’)
amended the Telephone Consumer
Protection Act of 1991 (‘‘TCPA’’) and
required the SEC to promulgate
telemarketing rules substantially similar
to those of the FTC, or direct selfregulatory organizations to do so, unless
the SEC determined that such rules
were not in the interest of investor
protection.5
In 1996 and 1997 the Amex adopted
Rule 428(a) and Rule 429 to require
members and member organizations to
maintain a centralized do-not-call list of
persons who do not wish to receive
telephone solicitations from members or
their associated persons, and to follow
time-of-day restrictions on
telemarketing.6
In 2003, the FCC and the FTC
established rules requiring sellers and
telemarketers to participate in a national
do-not-call registry. These rules include
a ‘‘safe harbor’’ for telemarketers that
have made a good faith effort to comply
with the national do-not-call rules. In
March 2004, the FTC and FCC further
amended their telemarketing rules to
require the use of a national do-not-call
registry that is no more than thirty-one
(31) days old.
In correspondence dated February 3,
2005, Commission staff recommended
that the Amex amend its telemarketing
rules to require its members and
member organizations to participate in
5 See
Amex Rule 429 currently limits
members, member organizations, and
associated persons from making
PO 00000
outbound calls to the residence of any
person for the purposes of soliciting the
purchase of securities or related services
between the hours of 8 a.m. and 9 p.m.
It also requires disclosure to the called
person of the caller’s identity, firm
telephone number and address, and the
purpose of the call. Rule 429 currently
creates exceptions from its time of day
and disclosure requirements for
telephone calls to certain categories of
‘‘existing customers.’’
The Exchange is proposing to amend
Amex Rule 429 to incorporate
applicable telemarketing regulations
issued by the FCC and to require
members and member organizations to
participate in the national do-not-call
registry maintained by the FTC.
Fmt 4703
Sfmt 4703
15 U.S.C. 6102(d)(1).
Securities Exchange Act Release No. 36748
(January 19, 1996), 61 FR 2556 (January 26, 1996);
Securities Exchange Act Release No. 38724 (June 6,
1997) 62 FR 32390 (June 13, 1997).
6 See
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the national do-not-call registry.7
Commission staff noted that NASD also
had recently filed an amendment to
their rules regarding the frequency of
updates from the national do-not-call
registry.8 In this regard, proposed Rule
429 is substantially similar to the NASD
rule that was approved by the
Commission in January 2004 and
amended in January 2005.9
Proposed Amex Rule 429
Paragraph (a)(1) of proposed Amex
Rule 429 provides that members,
member organizations, or persons
associated with a member or member
organization may engage in telephone
solicitations only between the hours of
8 a.m. and 9 p.m. unless (1) they have
an established business relationship
with the called person; (2) the member
has received that person’s prior express
invitation or permission; or (3) the
person called is a broker-dealer. These
provisions are essentially identical to
those already in place, except the
‘‘existing customer’’ exception is being
replaced with an ‘‘established business
relationship’’ exception, mirroring the
FCC’s Rules. As defined in paragraph
(g)(1)(A), an established business
relationship exists if the person called
has made a financial transaction, or has
a security position, a money balance, or
account activity with the member
within the previous eighteen (18)
months immediately preceding the date
of the telemarketing call, if 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 when the person has contacted
the member to inquire about a product
or service offered by the member within
the previous three (3) months
immediately preceding the date of the
telemarketing call.
Paragraph (a)(2) of proposed Amex
Rule 429 prohibits members and
member organizations, and persons
associated with a member or member
organization from initiating a telephone
solicitation to any person listed on a
firm specific do-not-call list. The firm
specific do-not-call list is maintained
pursuant to existing Amex Rule 428.
Paragraph (a)(3) of proposed Amex
Rule 429 requires firms to participate in
a national do-not-call list. Paragraph (b)
7 See Correspondence dated February 3, 2005
from Martha Mahan Haines, Assistant Director,
Division of Market Regulation, SEC.
8 See Securities Exchange Act Release No. 34–
49055 (January 12, 2004); 69 FR 2801 (January 20,
2004). See also Securities Exchange Act Release No.
34–51023 (January 11, 2005); 70 FR 2083 (January
19, 2005).
9 Id.
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of proposed Amex Rule 429 lists several
exceptions to the national do-not-call
list compliance requirement, where a
member making telephone solicitations
will not be liable for violating paragraph
(a)(3). First, a member will not be found
liable if they are able to demonstrate
that there is 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 set forth in
proposed Amex Rule 429(b), even if the
person continues to do business with
that member. The second exception
applies if the member has obtained the
person’s prior express invitation or
permission. Such permission must be
confirmed by a signed written
agreement between the person and the
member, which states that the person
agrees to be contacted by the member
and includes the telephone number to
which the calls may be placed. Finally,
the member or associated person
making the call will not be found liable
if the associated person making the call
has a personal relationship with the
recipient of the call.
Paragraph 429(c) creates a safe harbor
from the national do-not-call list
requirements of paragraph (a)(3). To be
eligible for this safe harbor, a member or
person associated with a member
making telephone solicitations must
demonstrate that the member’s routine
business practice meets the following
standards:
• The member must demonstrate that
it has established and implemented
written procedures to comply with the
national do-not-call rules;
• The member must demonstrate that
it has trained its personnel and any
entity assisting in its compliance, in
procedures established pursuant to the
national do-not-call rules;
• The member must demonstrate that
it has maintained and recorded a list of
telephone numbers that it may not
contact; and
• The member must demonstrate that
it uses a process to prevent telephone
solicitations to any telephone number
on any list established pursuant to the
do-not-call rules, and is employing 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, and maintains records
documenting this process.10
Paragraph 429(d) sets forth the
procedures necessary for members to
10 As noted above, the thirty-one (31) day
requirement is consistent with recent amendments
to the FCC and FTC rules that became effective
January 1, 2005.
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72479
comply with Proposed Amex Rule
429(a). Under paragraphs 429(d)(1)–
(d)(4), a firm’s procedures must meet the
following minimum standards:
• The member must have a written
policy for maintaining a do-not-call list;
• The member must demonstrate that
its personnel engaged in telemarketing
are informed and trained in the
existence and use of the do-not-call list;
• The member must record do-notcall requests when they are made and
honor them within a reasonable time
not to exceed 31 days;
• Members must provide the called
party with the name of the individual
caller, the name of the member, an
address or telephone number at which
the member may be contacted, and that
the purpose of the call is to solicit the
purchase of securities or a related
service. Such telephone number may
not be a 900 number or any other
number for which charges exceed local
or long-distance transmission charges.
Paragraph 429(d)(3) provides that a
member will be liable for any failure to
honor a do-not-call request by an entity
recording or maintaining such requests
on its behalf.
Paragraph 429(d)(5) provides that a
person’s do-not-call request applies to
the member making the call, and not to
affiliated entities, unless the consumer
reasonably would expect them to be
included given the identification of the
caller and the product being advertised,
or unless the consumer specifically
requests that it apply to affiliated
entities. Finally, paragraph (d)(6) of
proposed amended Amex Rule 429
requires that a member maintain a
record of the caller’s request not to
receive further telemarketing calls. A
firm specific do-not-call request must be
honored for five (5) years from the time
the request is made.
Paragraph 429(e) provides that the
provisions of the proposed rule also
apply to members telemarketing or
making telephone solicitation calls to
wireless telephone numbers. Paragraph
429(f) states that a member is
responsible for complying with the
foregoing provisions even if it uses
another entity to perform telemarketing
services on its behalf.
Paragraph 429(g) defines terms used
in proposed amended Rule 429. As
noted above, paragraph 429(g)(1)(A)
codifies the definition of an established
business relationship. Paragraph
429(g)(1)(B) further states 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. Similarly, an established
business relationship with an affiliate
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Federal Register / Vol. 70, No. 232 / Monday, December 5, 2005 / Notices
does not extend to the member unless
the person would reasonably expect the
member to be included.
Paragraph 429(g)(2) defines the terms
‘‘telemarketing’’ and ‘‘telephone
solicitation’’ to 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.
The term ‘‘personal relationship’’ is
defined in paragraph 429(g)(3) as any
family member, friend, or acquaintance
of the telemarketer making the call. The
term ‘‘account activity’’ as defined in
paragraph 429(g)(4) 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. Finally, the term
‘‘broker/dealer of record’’ as defined in
paragraph 429(g)(5) 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.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6 of the Exchange Act 11 in
general and furthers the objectives of
Section 6(b)(5) 12 in particular in that it
is 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
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. The Exchange believes the
proposed rule change will enhance
investor protection by enabling persons
who do not want to receive telephone
solicitations from members or member
organizations to receive the protections
of the national do-not-call registry.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
11 15
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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17:14 Dec 02, 2005
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received by the Exchange on this
proposal.
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, as amended, is consistent with
the Exchange Act. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to
rulecomments@sec.gov. Please include
File Number SR–Amex–2005–064 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–Amex–2005–064. 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 (https://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
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Fmt 4703
Sfmt 4703
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
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filing also will
be available for inspection and copying
at the principal office of the Amex. 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–Amex–2005–064 and
should be submitted on or before
December 27, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6828 Filed 12–2–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52851; File No. SR–CBOE–
2005–84]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change and Amendment No. 1
Thereto Relating to Transaction Fees
for Options on the Dow Jones
Industrial Average
November 29, 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 October
11, 2005, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the CBOE. On November 22, 2005,
the CBOE submitted Amendment No. 1
to the proposed rule change.3 The CBOE
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange revised the
proposed rule text to amend the fees assessed to
non-member market-makers for transactions in
options on the Dow Jones Industrial Average (‘‘DJX
options’’) and in ‘‘Jumbo’’ options on the Dow Jones
Industrial Average (‘‘DXL options’’). The Exchange
states that this change in fees assessed to nonmember market-makers for transactions in DJX
1 15
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]]>Agencies
[Federal Register Volume 70, Number 232 (Monday, December 5, 2005)]
[Notices]
[Pages 72477-72480]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6828]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52844; File No. SR-Amex-2005-064]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2
Thereto Relating to Telemarketing
November 28, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ (``Exchange Act'') and Rule 19b-4 thereunder,\2\ notice is
hereby given that on June 14, 2005, the American Stock Exchange LLC
(``Amex'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the Exchange. On September 23, 2005, the Amex filed Amendment No. 1
to the proposed rule change.\3\ On November 15, 2005, the Amex filed
Amendment No. 2 to the proposed rule change.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Amex partially amended the text of
proposed amended Amex Rule 429 and made conforming and technical
changes to the original filing.
\4\ In Amendment No. 2, the Amex made additional changes to the
text of proposed amended Amex Rule 429 and to the original filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Amex Rule 429
(``Telemarketing'') to require Amex members and member organizations to
participate in the National Do-Not-Call Registry maintained by the
Federal Trade Commission (``FTC'') and to follow applicable regulations
of the Federal Communications Commission (``FCC'').
The current text of Amex Rule 429 would be deleted. The text of the
proposed rule change is set forth below. Italics indicate new text.
Telemarketing
Rule 429.
(a) General Telemarketing Requirements
No member or member organization, or person associated with a
member or member organization shall initiate any telephone
solicitation, as defined in paragraph (g)(2) of this rule, to:
(1) 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 member has an established business relationship with the
person pursuant to paragraph (g)(1)(A),
(B) the member has received that person's prior express invitation
or permission, or
(C) the person called is a broker or dealer;
(2) 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
member; or
(3) 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 member making telephone solicitations will not be liable for
violating paragraph (a)(3) if:
(1) Established Business Relationship Exception
The member 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 member even if the person continues to do business with that
member;
(2) Prior Express Written Consent Exception
The member 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 member which states that the
person agrees to be contacted by the member and includes the telephone
number to which the calls may be placed; or
(3) Personal Relationship Exception
The associated person making the call has a personal relationship
with the recipient of the call.
(c) Safe Harbor Provision
A member or person associated with a member making telephone
solicitations will not be liable for violating paragraph (a)(3) if the
member or person associated with the member demonstrates that the
violation is the result of an error and that as part of the member's
routine business practice, it meets the following standards:
(1) Written procedures. The member has established and implemented
written procedures to comply with the national do-not-call rules;
(2) Training of personnel. The member has trained its personnel and
any entity assisting in its compliance, in procedures established
pursuant to the national do-not-call rules;
(3) Recording. The member has maintained and recorded a list of
telephone numbers that it may not contact; and
(4) Accessing the national do-not-call database. The member 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 thirty-one (31) days prior
to the date any call is made, and maintains records documenting this
process.
(d) Procedures
Prior to engaging in telemarketing, a member must institute
procedures to comply with paragraph (a). Such procedures must meet the
following minimum standards:
(1) Written policy. Members must have a written policy for
maintaining a do-not-call list.
(2) 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.
(3) Recording, honoring of do-not-call requests. If a member
receives a request from a person not to receive calls from that member,
the member 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. Members 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
[[Page 72478]]
are being recorded or maintained by a party other than the member on
whose behalf the telemarketing call is made, the member on whose behalf
the telemarketing call is made will be liable for any failure to honor
the do not call request.
(4) Identification of sellers and telemarketers. A member or person
associated with a member making a call for telemarketing purposes must
provide the called party with the name of the individual caller, the
name of the member, an address or telephone number at which the member
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.
(5) 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 member 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.
(6) Maintenance of do-not-call lists. A member making calls for
telemarketing purposes must maintain a record of the caller's request
not to receive further telemarketing calls. A firm specific do-not-call
request must be honored for five (5) years from the time the request is
made.
(e) Wireless Communications
The provisions set forth in this rule are applicable to members
telemarketing or making telephone solicitations calls to wireless
telephone numbers.
(f) Outsourcing Telemarketing
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 this rule.
(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 within
the previous eighteen months immediately preceding the date of the
telemarketing call;
(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
(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) 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.
(3) The term ``personal relationship'' means any family member,
friend, or acquaintance of the telemarketer making the call.
(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. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Amex 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 Exchange 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Amex Rule 429 currently limits members, member organizations, and
associated persons from making outbound calls to the residence of any
person for the purposes of soliciting the purchase of securities or
related services between the hours of 8 a.m. and 9 p.m. It also
requires disclosure to the called person of the caller's identity, firm
telephone number and address, and the purpose of the call. Rule 429
currently creates exceptions from its time of day and disclosure
requirements for telephone calls to certain categories of ``existing
customers.''
The Exchange is proposing to amend Amex Rule 429 to incorporate
applicable telemarketing regulations issued by the FCC and to require
members and member organizations to participate in the national do-not-
call registry maintained by the FTC.
Background
In 1992 and 1995, the FCC and the FTC established regulations
requiring firms to maintain do-not-call lists and to limit the hours of
telephone solicitations. The Telemarketing and Consumer Fraud Abuse
Prevention Act of 1994 (the ``Telemarketing Act'') amended the
Telephone Consumer Protection Act of 1991 (``TCPA'') and required the
SEC to promulgate telemarketing rules substantially similar to those of
the FTC, or direct self-regulatory organizations to do so, unless the
SEC determined that such rules were not in the interest of investor
protection.\5\
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\5\ See 15 U.S.C. 6102(d)(1).
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In 1996 and 1997 the Amex adopted Rule 428(a) and Rule 429 to
require members and member organizations to maintain a centralized do-
not-call list of persons who do not wish to receive telephone
solicitations from members or their associated persons, and to follow
time-of-day restrictions on telemarketing.\6\
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\6\ See Securities Exchange Act Release No. 36748 (January 19,
1996), 61 FR 2556 (January 26, 1996); Securities Exchange Act
Release No. 38724 (June 6, 1997) 62 FR 32390 (June 13, 1997).
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In 2003, the FCC and the FTC established rules requiring sellers
and telemarketers to participate in a national do-not-call registry.
These rules include a ``safe harbor'' for telemarketers that have made
a good faith effort to comply with the national do-not-call rules. In
March 2004, the FTC and FCC further amended their telemarketing rules
to require the use of a national do-not-call registry that is no more
than thirty-one (31) days old.
In correspondence dated February 3, 2005, Commission staff
recommended that the Amex amend its telemarketing rules to require its
members and member organizations to participate in
[[Page 72479]]
the national do-not-call registry.\7\ Commission staff noted that NASD
also had recently filed an amendment to their rules regarding the
frequency of updates from the national do-not-call registry.\8\ In this
regard, proposed Rule 429 is substantially similar to the NASD rule
that was approved by the Commission in January 2004 and amended in
January 2005.\9\
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\7\ See Correspondence dated February 3, 2005 from Martha Mahan
Haines, Assistant Director, Division of Market Regulation, SEC.
\8\ See Securities Exchange Act Release No. 34-49055 (January
12, 2004); 69 FR 2801 (January 20, 2004). See also Securities
Exchange Act Release No. 34-51023 (January 11, 2005); 70 FR 2083
(January 19, 2005).
\9\ Id.
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Proposed Amex Rule 429
Paragraph (a)(1) of proposed Amex Rule 429 provides that members,
member organizations, or persons associated with a member or member
organization may engage in telephone solicitations only between the
hours of 8 a.m. and 9 p.m. unless (1) they have an established business
relationship with the called person; (2) the member has received that
person's prior express invitation or permission; or (3) the person
called is a broker-dealer. These provisions are essentially identical
to those already in place, except the ``existing customer'' exception
is being replaced with an ``established business relationship''
exception, mirroring the FCC's Rules. As defined in paragraph
(g)(1)(A), an established business relationship exists if the person
called has made a financial transaction, or has a security position, a
money balance, or account activity with the member within the previous
eighteen (18) months immediately preceding the date of the
telemarketing call, if 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 when the person has
contacted the member to inquire about a product or service offered by
the member within the previous three (3) months immediately preceding
the date of the telemarketing call.
Paragraph (a)(2) of proposed Amex Rule 429 prohibits members and
member organizations, and persons associated with a member or member
organization from initiating a telephone solicitation to any person
listed on a firm specific do-not-call list. The firm specific do-not-
call list is maintained pursuant to existing Amex Rule 428.
Paragraph (a)(3) of proposed Amex Rule 429 requires firms to
participate in a national do-not-call list. Paragraph (b) of proposed
Amex Rule 429 lists several exceptions to the national do-not-call list
compliance requirement, where a member making telephone solicitations
will not be liable for violating paragraph (a)(3). First, a member will
not be found liable if they are able to demonstrate that there is 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 set forth in
proposed Amex Rule 429(b), even if the person continues to do business
with that member. The second exception applies if the member has
obtained the person's prior express invitation or permission. Such
permission must be confirmed by a signed written agreement between the
person and the member, which states that the person agrees to be
contacted by the member and includes the telephone number to which the
calls may be placed. Finally, the member or associated person making
the call will not be found liable if the associated person making the
call has a personal relationship with the recipient of the call.
Paragraph 429(c) creates a safe harbor from the national do-not-
call list requirements of paragraph (a)(3). To be eligible for this
safe harbor, a member or person associated with a member making
telephone solicitations must demonstrate that the member's routine
business practice meets the following standards:
The member must demonstrate that it has established and
implemented written procedures to comply with the national do-not-call
rules;
The member must demonstrate that it has trained its
personnel and any entity assisting in its compliance, in procedures
established pursuant to the national do-not-call rules;
The member must demonstrate that it has maintained and
recorded a list of telephone numbers that it may not contact; and
The member must demonstrate that it uses a process to
prevent telephone solicitations to any telephone number on any list
established pursuant to the do-not-call rules, and is employing 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, and maintains records documenting this
process.\10\
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\10\ As noted above, the thirty-one (31) day requirement is
consistent with recent amendments to the FCC and FTC rules that
became effective January 1, 2005.
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Paragraph 429(d) sets forth the procedures necessary for members to
comply with Proposed Amex Rule 429(a). Under paragraphs 429(d)(1)-
(d)(4), a firm's procedures must meet the following minimum standards:
The member must have a written policy for maintaining a
do-not-call list;
The member must demonstrate that its personnel engaged in
telemarketing are informed and trained in the existence and use of the
do-not-call list;
The member must record do-not-call requests when they are
made and honor them within a reasonable time not to exceed 31 days;
Members must provide the called party with the name of the
individual caller, the name of the member, an address or telephone
number at which the member may be contacted, and that the purpose of
the call is to solicit the purchase of securities or a related service.
Such telephone number may not be a 900 number or any other number for
which charges exceed local or long-distance transmission charges.
Paragraph 429(d)(3) provides that a member will be liable for any
failure to honor a do-not-call request by an entity recording or
maintaining such requests on its behalf.
Paragraph 429(d)(5) provides that a person's do-not-call request
applies to the member making the call, and not to affiliated entities,
unless the consumer reasonably would expect them to be included given
the identification of the caller and the product being advertised, or
unless the consumer specifically requests that it apply to affiliated
entities. Finally, paragraph (d)(6) of proposed amended Amex Rule 429
requires that a member maintain a record of the caller's request not to
receive further telemarketing calls. A firm specific do-not-call
request must be honored for five (5) years from the time the request is
made.
Paragraph 429(e) provides that the provisions of the proposed rule
also apply to members telemarketing or making telephone solicitation
calls to wireless telephone numbers. Paragraph 429(f) states that a
member is responsible for complying with the foregoing provisions even
if it uses another entity to perform telemarketing services on its
behalf.
Paragraph 429(g) defines terms used in proposed amended Rule 429.
As noted above, paragraph 429(g)(1)(A) codifies the definition of an
established business relationship. Paragraph 429(g)(1)(B) further
states 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. Similarly, an established
business relationship with an affiliate
[[Page 72480]]
does not extend to the member unless the person would reasonably expect
the member to be included.
Paragraph 429(g)(2) defines the terms ``telemarketing'' and
``telephone solicitation'' to 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.
The term ``personal relationship'' is defined in paragraph
429(g)(3) as any family member, friend, or acquaintance of the
telemarketer making the call. The term ``account activity'' as defined
in paragraph 429(g)(4) 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. Finally, the term ``broker/dealer of record'' as
defined in paragraph 429(g)(5) 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.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Exchange Act \11\ in general and furthers the
objectives of Section 6(b)(5) \12\ in particular in that it is 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 facilitating transactions in
securities, and to remove impediments to and perfect the mechanism of a
free and open market and a national market system. The Exchange
believes the proposed rule change will enhance investor protection by
enabling persons who do not want to receive telephone solicitations
from members or member organizations to receive the protections of the
national do-not-call registry.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received by the Exchange on
this proposal.
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, as amended, is consistent with the Exchange Act. Comments may
be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rulecomments@sec.gov. Please include
File Number SR-Amex-2005-064 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-Amex-2005-064. 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 (https://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 Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of the Amex. 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-Amex-2005-064 and should be
submitted on or before December 27, 2005.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-6828 Filed 12-2-05; 8:45 am]
BILLING CODE 8010-01-P
