Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt FINRA Rule 3230 (Telemarketing) in the FINRA Consolidated Rulebook, 67787-67790 [2011-28348]

Download as PDF Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices proposed changes to the quarterly trading requirements should enhance the market making function performed by ROTs and thereby serve to maintain fair and orderly markets and generally promote the protection of investors and the public interest. IV. Conclusion It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,6 that the proposed rule change (SR–Phlx–2011– 123) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–28372 Filed 11–1–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65645; File No. SR–FINRA– 2011–059] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt FINRA Rule 3230 (Telemarketing) in the FINRA Consolidated Rulebook October 27, 2011. emcdonald on DSK5VPTVN1PROD with NOTICES 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 13, 2011, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to adopt NASD Rule 2212 (Telemarketing) as FINRA Rule 3230 (Telemarketing) in the consolidated FINRA rulebook, subject to certain amendments. The proposed rule change would delete Incorporated NYSE Rule 440A (Telephone Solicitation) and Incorporated NYSE Rule Interpretation 440A/01. Additionally, the proposed 6 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 7 17 VerDate Mar<15>2010 19:21 Nov 01, 2011 Jkt 226001 rule change would adopt provisions that are substantially similar to the telemarketing rules of the Federal Trade Commission (‘‘FTC’’). The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA, 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, FINRA 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. FINRA 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 As part of the process of developing a new consolidated rulebook (‘‘Consolidated FINRA Rulebook’’),3 FINRA is proposing to adopt NASD Rule 2212 (Telemarketing) as FINRA Rule 3230 (Telemarketing) with changes discussed below. The proposed rule change would delete Incorporated NYSE Rule 440A 4 (Telephone Solicitation) and Incorporated NYSE Rule Interpretation 440A/01 as they are, in main part, duplicative of NASD Rule 2212. However, as further described below, the proposed rule change would incorporate certain provisions of NYSE Rule 440A and its Interpretation into new FINRA Rule 3230. Further, the proposed rule change adds provisions that are substantially similar to FTC rules that prohibit deceptive and other abusive telemarketing acts or practices as described below. 3 The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’) (together, the NASD Rules and Incorporated NYSE Rules are referred to as the ‘‘Transitional Rulebook’’). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (‘‘Dual Members’’). The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see Information Notice, March 12, 2008 (Rulebook Consolidation Process). 4 For convenience, the proposed rule change refers to Incorporated NYSE Rules as NYSE Rules. PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 67787 NASD Rule 2212 and NYSE Rule 440A are similar rules that require members to maintain do-not-call lists, limit the hours of telephone solicitations, and prohibit members from using deceptive and abusive acts and practices in connection with telemarketing. The Commission directed FINRA and NYSE to enact these telemarketing rules in accordance with the Telemarketing Consumer Fraud and Abuse Prevention Act of 1994 (‘‘Prevention Act’’).5 The Prevention Act requires the Commission to promulgate or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices.6 In 2003, the FTC and the Federal Communications Commission (‘‘FCC’’) established requirements for sellers and telemarketers to participate in the national do-not-call registry.7 Pursuant to the Prevention Act, the Commission requested that FINRA and NYSE amend their telemarketing rules to include a requirement that their members participate in the national do-not-call registry. In 2004, the Commission approved amendments to NASD Rule 2212 requiring member firms to participate in the national do-not-call registry.8 The following year, the Commission approved amendments to NYSE Rule 440A, which were similar to the NASD rule amendments, but included additional provisions regarding the use of caller identification information, pre-recorded messages, telephone facsimiles, and computer advertisements.9 As mentioned above, the Prevention Act requires the Commission to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices.10 Earlier this year, Commission staff directed FINRA to conduct a review of its telemarketing rule and propose rule amendments that provide protections that are at least as strong as those provided by the FTC’s 5 15 U.S.C. 6101–6108. U.S.C. 6102. 7 See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25, 2003); CG Docket No. 02–278, FCC 03–153, (adopted June 26, 2003; released July 3, 2003). 8 See Securities Exchange Act Release No. 49055 (January 12, 2004), 69 FR 2801 (January 20, 2004) (approval order). 9 See Securities Exchange Act Release No. 52579 (October 7, 2005), 70 FR 60119 (October 14, 2005) (approval order). 10 See supra note 6. 6 15 E:\FR\FM\02NON1.SGM 02NON1 67788 Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices emcdonald on DSK5VPTVN1PROD with NOTICES telemarketing rules.11 Commission staff had concerns ‘‘that the SRO [selfregulatory organization] rules overall have not kept pace with the FTC’s rules, and thus may no longer meet the standards of the Prevention Act.’’ 12 Proposed FINRA Rule 3230 The proposed rule change would adopt NASD Rule 2212 into the Consolidated FINRA Rulebook as FINRA Rule 3230 (Telemarketing) in the consolidated FINRA rulebook, subject to certain amendments. The proposed rule change would incorporate certain unique aspects of NYSE Rule 440A and its Interpretation. Additionally, the proposed rule change would make amendments and adopt provisions that are substantially similar to rules promulgated by the FTC pursuant to the Prevention Act. First, the proposed rule change would adopt into new FINRA Rule 3230 similar caller identification information provisions contained in NYSE Rule 440A(h). These provisions provide that members engaging in telemarketing must transmit caller identification information and are explicitly prohibited from blocking caller identification information. The telephone number provided must permit any person to make a do-not-call request during normal business hours. Inclusion of these caller identification information provisions in the proposed rule will not create any new obligations on broker-dealers as they are already subject to identical provisions under FCC regulations.13 The proposed rule change would not incorporate the additional provisions in NYSE Rule 440A regarding pre-recorded messages and the use of telephone facsimile or computer advertisements.14 Similar provisions were never adopted by the FTC under the Prevention Act and thus are not required to be part of SEC or SRO rules. Moreover, these provisions in the NYSE rule are duplicative of similar FCC regulations that are applicable to broker-dealers.15 Second, the proposed rule change would adopt a provision that is similar to NYSE Rule Interpretation 440A/01 as Supplementary Material. The provision reminds firms that the rule does not affect the obligation of any member or person associated with a member that engages in telemarketing to comply with 11 See Letter from Robert W. Cook, Director, Division of Trading and Markets, SEC, to Richard G. Ketchum, Chairman and Chief Executive Officer, FINRA, dated May 10, 2011. 12 Id. 13 See 47 CFR 64.1601. 14 See NYSE Rule 440A(e), (g), (j)(3), (6), (8). 15 See 47 CFR 64.1200. VerDate Mar<15>2010 19:21 Nov 01, 2011 Jkt 226001 relevant state and federal laws and rules, including the rules of the FCC relating to telemarketing practices and the rights of telephone consumers. The proposed rule change would not incorporate the remainder of NYSE Rule Interpretation 440A/01 because the requirement for a member to make and maintain a list of persons who do not want to receive telephone solicitations is duplicative of an existing provision in the NASD rule.16 Third, the proposed rule change, as directed by the Commission staff, would make amendments and adopt provisions that are substantially similar to FTC rules that prohibit deceptive and other abusive telemarketing acts or practices as described below. Maintenance of Do-Not-Call Lists Proposed FINRA Rule 3230(d)(6) would maintain the requirement in NASD Rule 2212(d)(6) that a member making an outbound telephone call must maintain a record of a caller’s request not to receive further calls. However, the proposed rule change would delete the requirement that a member honor a firm-specific do-notcall request for five years from the time the request is made. Commission staff directed FINRA to delete this provision because the time for which the firmspecific opt-out must be honored under the FTC’s Telemarketing Sales Rule 17 is indefinite, rather than five years as currently provided in the rule.18 Wireless Communications NASD Rule 2212(e) states that the provisions set forth in the rule are applicable to members telemarketing or making telephone solicitations calls to wireless telephone numbers. Proposed FINRA Rule 3230(e) would clarify that the application of the rule also applies to persons associated with a member making outbound telephone calls to wireless telephone numbers. Outsourcing Telemarketing NASD Rule 2212(f) states that 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 the rule. Proposed FINRA Rule 3230(f) would clarify that members must consider whether the entity or person that a member uses for outsourcing, must be appropriately registered or licensed, where required. 16 See NASD Rule 2212(d)(6). 16 CFR 310. 18 See supra note 11. 17 See PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 Unencrypted Consumer Account Numbers Proposed FINRA Rule 3230(h) would prohibit a member or person associated with a member from disclosing or receiving, for consideration, unencrypted consumer account numbers for use in telemarketing. The proposed rule change is substantially similar to the FTC’s provision regarding unencrypted consumer account numbers.19 The FTC provided a discussion of the provision when it was adopted pursuant to the Prevention Act.20 Additionally, the proposed rule change would define ‘‘unencrypted’’ as not only complete, visible account numbers, whether provided in lists or singly, but also encrypted information with a key to its decryption. The proposed definition is substantially similar to the view taken by the FTC.21 Submission of Billing Information Proposed FINRA Rule 3230(i) would require, for any telemarketing transaction, a member or person associated with a member to obtain the express informed consent of the person to be charged, and to be charged using the identified account. If the telemarketing transaction involves preacquired account information and a free-to-pay conversion feature, the member or person associated with a member would have to: (1) Obtain from the customer, at a minimum, the last four digits of the account number to be charged; (2) obtain from the customer an express agreement to be charged and to be charged using the identified account number; and (3) make and maintain an audio recording of the entire telemarketing transaction. For any other telemarketing transaction involving preacquired account information, the member or person associated with a member would have to: (1) Identify the account to be charged with sufficient specificity for the customer to understand what account will be charged; and (2) obtain from the customer an express agreement to be charged and to be charged using the identified account number. The proposed rule change is substantially similar to the FTC’s provision regarding the submission of billing information.22 The FTC provided a discussion of the provision when it was adopted pursuant to the Prevention Act.23 19 See 16 CFR 310.4(a)(6). FTC, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at 4615. 21 See id. at 4616. 22 See 16 CFR 310.4(a)(7). 23 See FTC, supra note 20, at 4615. 20 See E:\FR\FM\02NON1.SGM 02NON1 Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices emcdonald on DSK5VPTVN1PROD with NOTICES Abandoned Calls Proposed FINRA Rule 3230(j) would prohibit a member or person associated with a member from abandoning any outbound telemarketing call. The abandoned calls prohibition would be subject to a ‘‘safe harbor’’ under proposed subparagraph (j)(2) that requires: (1) The member or person associated with a member to employ technology that ensures abandonment of no more than three percent of all calls answered by a person, measured over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30-day period or portion thereof that the campaign continues; (2) the member or person associated with a member, for each telemarketing call placed, allows the telephone to ring for at least 15 seconds or four rings before disconnecting an unanswered call; (3) whenever a person associated with a member is not available to speak with the person answering the telemarketing call within two seconds after the person’s completed greeting, the member or person associated with a member promptly plays a recorded message stating the name and telephone number of the member or person associated with a member on whose behalf the call was placed; and (4) the member to maintain records documenting compliance with the ‘‘safe harbor.’’ The proposed rule change is substantially similar to the FTC’s provisions regarding abandoned calls.24 The FTC provided a discussion of the provisions when they were adopted pursuant to the Prevention Act.25 Prerecorded Messages Proposed FINRA Rule 3230(k) would prohibit a member or person associated with a member from initiating any outbound telemarketing call that delivers a prerecorded message without a person’s express written agreement to receive such calls. The proposed rule change also would require that all prerecorded telemarketing calls provide specified opt-out mechanisms so that a person can opt out of future calls. The prohibition would not apply to a prerecorded message permitted for compliance with the ‘‘safe harbor’’ for abandoned calls under proposed subparagraph (j)(2). The proposed rule change is substantially similar to the FTC’s provisions regarding prerecorded messages.26 The FTC provided a discussion of the provisions when they 24 See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4). 25 See FTC, supra note 20, at 4641. 26 See 16 CFR 310.4(b)(1)(v). VerDate Mar<15>2010 19:21 Nov 01, 2011 Jkt 226001 were adopted pursuant to the Prevention Act.27 Credit Card Laundering Proposed FINRA Rule 3230(l) would prohibit credit card laundering, the practice of depositing into the credit card system a sales draft that is not the result of a credit card transaction between the cardholder and the member. Except as expressly permitted, the proposed rule change would prohibit a member or person associated with a member from: (1) Presenting to or depositing into, the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the member; (2) employing, soliciting, or otherwise causing a merchant, or an employee, representative or agent of the merchant, to present to or to deposit into the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; or (3) obtaining access to the credit card system through the use of a business relationship or an affiliation with a merchant, when such access is not authorized by the merchant agreement or the applicable credit card system. The proposed rule change is substantially similar to the FTC’s provisions regarding credit card laundering.28 The FTC provided a discussion of the provisions when they were adopted pursuant to the Prevention Act.29 Definitions Proposed FINRA Rule 3230(m) would adopt definitions that are substantially similar to the FTC’s definitions.30 The proposed rule change would adopt substantially similar definitions of ‘‘acquirer,’’ 31 ‘‘billing information,’’ 32 ‘‘caller identification service,’’ 33 ‘‘cardholder,’’ 34 ‘‘charitable contribution,’’ 35 ‘‘credit,’’ 36 ‘‘credit card,’’ 37 ‘‘credit card sales draft,’’ 38 27 See Federal Trade Commission, Telemarketing Sales Rule, 73 FR 51164 (August 29, 2008). 28 See 16 CFR 310.2. 29 See Federal Trade Commission, Telemarketing Sales Rule, 60 FR 43842 (August 23, 1995) at 43852. 30 See 16 CFR 310.2. 31 See 16 CFR 310.2(a). 32 See 16 CFR 310.2(c). 33 See 16 CFR 310.2(d). 34 See 16 CFR 310.2(e). 35 See 16 CFR 310.2(f). 36 See 16 CFR 310.2(h). 37 See 16 CFR 310.2(i). 38 See 16 CFR 310.2(j). PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 67789 ‘‘credit card system,’’ 39 ‘‘customer,’’ 40 ‘‘donor,’’ 41 ‘‘free-to-pay conversion,’’ 42 ‘‘merchant,’’ 43 ‘‘merchant agreement,’’ 44 ‘‘outbound telephone call,’’ 45 ‘‘person’’ 46 and ‘‘preacquired account information.’’ 47 Additionally, the proposed rule change amends the definition of ‘‘telemarketing’’ to track the FTC definition and deletes the reference to ‘‘telephone solicitation.’’ The FTC provided a discussion of each definition when they were adopted pursuant to the Prevention Act.48 Technical and Conforming Changes The proposed rule change also would make a number of minor technical and conforming changes. First, proposed FINRA Rule 3230(m) would renumber and make minor technical changes to the terms ‘‘account activity,’’ ‘‘brokerdealer of record’’ and ‘‘established business relationship.’’ Second, proposed FINRA Rule 3230 would amend paragraphs (a), (b) and (c) by replacing the term ‘‘telephone solicitation’’ with the term ‘‘outbound telephone call.’’ Third, proposed FINRA Rule 3230(d) would replace the term ‘‘telemarketing call’’ with the term ‘‘outbound telephone call.’’ Fourth, the proposed rule change would update a reference to an ‘‘established business relationship’’ in subparagraph (a)(1)(A). Finally, the proposed rule change would amend paragraph (b) to clarify that a signed, written agreement may be obtained electronically under the E-Sign Act. FINRA will announce the implementation date of the proposed rule change in a Regulatory Notice to be published no later than 90 days following Commission approval. The implementation date will be no later than 180 days following Commission approval. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,49 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in 39 See 16 CFR 310.2(k). 16 CFR 310.2(l). 41 See 16 CFR 310.2(n). 42 See 16 CFR 310.2(p). 43 See 16 CFR 310.2(s). 44 See 16 CFR 310.2(t). 45 See 16 CFR 310.2(v). 46 See 16 CFR 310.2(w). 47 See 16 CFR 310.2(x). 48 See FTC, supra note 29, at 43843; see also FTC, supra note 20, at 4587. 49 15 U.S.C. 78o–3(b)(6). 40 See E:\FR\FM\02NON1.SGM 02NON1 67790 Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices general, to protect investors and the public interest. FINRA believes that the proposed rule change will protect investors and the public interest by continuing to prohibit deceptive and other abusive telemarketing acts or practices. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 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 or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments subject line if email 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 Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA–2011–059 and should be submitted on or before November 23, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.50 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–28348 Filed 11–1–11; 8:45 am] Charter was approved and filed with Congress and the Library of Congress. The General Advisory Committee to the U.S. Section of the IATTC was established pursuant to Section 4 of the Tuna Conventions Act of 1950 (16 U.S.C. 953, as amended), the implementing statute for the IATTC Convention. The goal of the Advisory Committee is to serve the U.S. Section to the IATTC, including the Department of State, as advisors on matters relating to international conservation and management of stocks of tuna and dolphins, in the eastern tropical Pacific Ocean, and in particular on the development of U.S. policies and positions associated with such matters. The Committee is composed of representatives of the major U.S. tuna harvesting, processing, and marketing sectors, as well as recreational fishing and environmental interests, formulating specific policy recommendations for the U.S. Section to the IATTC. The Advisory Committee will continue to follow the procedure prescribed by the Federal Advisory Committee Act (FACA). Notice of meetings is published in the Federal Register in advance as required by FACA and meetings are open to the public unless a determination is made in accordance with Section 10 of the FACA that a meeting or a portion of the meeting should be closed to the public. FOR FURTHER INFORMATION CONTACT: David F. Hogan, IATTC GAC Designated Federal Official, Office of Marine Conservation, Bureau of Oceans and International Environmental and Scientific Affairs, U.S. Department of State, Washington, DC 20520, Phone: (202) 647–2335. 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: BILLING CODE 8011–01–P Electronic Comments Advisory Committee to the U.S. Section of the Inter-American Tropical Tuna Commission (Committee Renewal) [FR Doc. 2011–28429 Filed 11–1–11; 8:45 am] The Department of State announces the renewal of the charter for the Advisory Committee to the U.S. Section of the Inter-American Tropical Tuna Commission (IATTC) for an additional two years. The Advisory Committee to the U.S. Section of the IATTC may be terminated only by law. In accordance with the provisions of the Federal Advisory Committee Act (92), a new Charter must be issued on a biennial basis from the date the current DEPARTMENT OF TRANSPORTATION • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–FINRA–2011–059 on the subject line. emcdonald on DSK5VPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2011–059. This file number should be included on the VerDate Mar<15>2010 19:21 Nov 01, 2011 Jkt 226001 Dated: October 20, 2011. William Meara, Acting, Deputy Assistant Secretary for Oceans and Fisheries, Department of State. DEPARTMENT OF STATE [Public Notice: 7670] SUMMARY: BILLING CODE 4710–09–P Surface Transportation Board [Docket No. MC–F 21041] National Express Acquisition Corporation—Control—Petermann Partners, Inc. Surface Transportation Board. Notice Tentatively Approving and Authorizing Finance Transaction. AGENCY: ACTION: National Express Acquisition Corporation (NEAC) and National SUMMARY: 50 17 PO 00000 CFR 200.30–3(a)(12). Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\02NON1.SGM 02NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Notices]
[Pages 67787-67790]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28348]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65645; File No. SR-FINRA-2011-059]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Adopt
FINRA Rule 3230 (Telemarketing) in the FINRA Consolidated Rulebook

October 27, 2011.
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 13, 2011, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been substantially prepared by
FINRA. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
---------------------------------------------------------------------------

\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

FINRA is proposing to adopt NASD Rule 2212 (Telemarketing) as FINRA
Rule 3230 (Telemarketing) in the consolidated FINRA rulebook, subject
to certain amendments. The proposed rule change would delete
Incorporated NYSE Rule 440A (Telephone Solicitation) and Incorporated
NYSE Rule Interpretation 440A/01. Additionally, the proposed rule
change would adopt provisions that are substantially similar to the
telemarketing rules of the Federal Trade Commission (``FTC'').
The text of the proposed rule change is available on FINRA's Web
site at https://www.finra.org, at the principal office of FINRA, 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, FINRA 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. FINRA 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
As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\3\ FINRA is proposing to adopt NASD
Rule 2212 (Telemarketing) as FINRA Rule 3230 (Telemarketing) with
changes discussed below. The proposed rule change would delete
Incorporated NYSE Rule 440A \4\ (Telephone Solicitation) and
Incorporated NYSE Rule Interpretation 440A/01 as they are, in main
part, duplicative of NASD Rule 2212. However, as further described
below, the proposed rule change would incorporate certain provisions of
NYSE Rule 440A and its Interpretation into new FINRA Rule 3230.
Further, the proposed rule change adds provisions that are
substantially similar to FTC rules that prohibit deceptive and other
abusive telemarketing acts or practices as described below.
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\3\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
\4\ For convenience, the proposed rule change refers to
Incorporated NYSE Rules as NYSE Rules.
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NASD Rule 2212 and NYSE Rule 440A are similar rules that require
members to maintain do-not-call lists, limit the hours of telephone
solicitations, and prohibit members from using deceptive and abusive
acts and practices in connection with telemarketing. The Commission
directed FINRA and NYSE to enact these telemarketing rules in
accordance with the Telemarketing Consumer Fraud and Abuse Prevention
Act of 1994 (``Prevention Act'').\5\ The Prevention Act requires the
Commission to promulgate or direct any national securities exchange or
registered securities association to promulgate, rules substantially
similar to the FTC rules to prohibit deceptive and other abusive
telemarketing acts or practices.\6\
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\5\ 15 U.S.C. 6101-6108.
\6\ 15 U.S.C. 6102.
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In 2003, the FTC and the Federal Communications Commission
(``FCC'') established requirements for sellers and telemarketers to
participate in the national do-not-call registry.\7\ Pursuant to the
Prevention Act, the Commission requested that FINRA and NYSE amend
their telemarketing rules to include a requirement that their members
participate in the national do-not-call registry. In 2004, the
Commission approved amendments to NASD Rule 2212 requiring member firms
to participate in the national do-not-call registry.\8\ The following
year, the Commission approved amendments to NYSE Rule 440A, which were
similar to the NASD rule amendments, but included additional provisions
regarding the use of caller identification information, pre-recorded
messages, telephone facsimiles, and computer advertisements.\9\
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\7\ See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25,
2003); CG Docket No. 02-278, FCC 03-153, (adopted June 26, 2003;
released July 3, 2003).
\8\ See Securities Exchange Act Release No. 49055 (January 12,
2004), 69 FR 2801 (January 20, 2004) (approval order).
\9\ See Securities Exchange Act Release No. 52579 (October 7,
2005), 70 FR 60119 (October 14, 2005) (approval order).
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As mentioned above, the Prevention Act requires the Commission to
promulgate, or direct any national securities exchange or registered
securities association to promulgate, rules substantially similar to
the FTC rules to prohibit deceptive and other abusive telemarketing
acts or practices.\10\ Earlier this year, Commission staff directed
FINRA to conduct a review of its telemarketing rule and propose rule
amendments that provide protections that are at least as strong as
those provided by the FTC's

[[Page 67788]]

telemarketing rules.\11\ Commission staff had concerns ``that the SRO
[self-regulatory organization] rules overall have not kept pace with
the FTC's rules, and thus may no longer meet the standards of the
Prevention Act.'' \12\
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\10\ See supra note 6.
\11\ See Letter from Robert W. Cook, Director, Division of
Trading and Markets, SEC, to Richard G. Ketchum, Chairman and Chief
Executive Officer, FINRA, dated May 10, 2011.
\12\ Id.
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Proposed FINRA Rule 3230
The proposed rule change would adopt NASD Rule 2212 into the
Consolidated FINRA Rulebook as FINRA Rule 3230 (Telemarketing) in the
consolidated FINRA rulebook, subject to certain amendments. The
proposed rule change would incorporate certain unique aspects of NYSE
Rule 440A and its Interpretation. Additionally, the proposed rule
change would make amendments and adopt provisions that are
substantially similar to rules promulgated by the FTC pursuant to the
Prevention Act.
First, the proposed rule change would adopt into new FINRA Rule
3230 similar caller identification information provisions contained in
NYSE Rule 440A(h). These provisions provide that members engaging in
telemarketing must transmit caller identification information and are
explicitly prohibited from blocking caller identification information.
The telephone number provided must permit any person to make a do-not-
call request during normal business hours. Inclusion of these caller
identification information provisions in the proposed rule will not
create any new obligations on broker-dealers as they are already
subject to identical provisions under FCC regulations.\13\
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\13\ See 47 CFR 64.1601.
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The proposed rule change would not incorporate the additional
provisions in NYSE Rule 440A regarding pre-recorded messages and the
use of telephone facsimile or computer advertisements.\14\ Similar
provisions were never adopted by the FTC under the Prevention Act and
thus are not required to be part of SEC or SRO rules. Moreover, these
provisions in the NYSE rule are duplicative of similar FCC regulations
that are applicable to broker-dealers.\15\
---------------------------------------------------------------------------

\14\ See NYSE Rule 440A(e), (g), (j)(3), (6), (8).
\15\ See 47 CFR 64.1200.
---------------------------------------------------------------------------

Second, the proposed rule change would adopt a provision that is
similar to NYSE Rule Interpretation 440A/01 as Supplementary Material.
The provision reminds firms that the rule does not affect the
obligation of any member or person associated with a member that
engages in telemarketing to comply with relevant state and federal laws
and rules, including the rules of the FCC relating to telemarketing
practices and the rights of telephone consumers. The proposed rule
change would not incorporate the remainder of NYSE Rule Interpretation
440A/01 because the requirement for a member to make and maintain a
list of persons who do not want to receive telephone solicitations is
duplicative of an existing provision in the NASD rule.\16\
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\16\ See NASD Rule 2212(d)(6).
---------------------------------------------------------------------------

Third, the proposed rule change, as directed by the Commission
staff, would make amendments and adopt provisions that are
substantially similar to FTC rules that prohibit deceptive and other
abusive telemarketing acts or practices as described below.
Maintenance of Do-Not-Call Lists
Proposed FINRA Rule 3230(d)(6) would maintain the requirement in
NASD Rule 2212(d)(6) that a member making an outbound telephone call
must maintain a record of a caller's request not to receive further
calls. However, the proposed rule change would delete the requirement
that a member honor a firm-specific do-not-call request for five years
from the time the request is made. Commission staff directed FINRA to
delete this provision because the time for which the firm-specific opt-
out must be honored under the FTC's Telemarketing Sales Rule \17\ is
indefinite, rather than five years as currently provided in the
rule.\18\
---------------------------------------------------------------------------

\17\ See 16 CFR 310.
\18\ See supra note 11.
---------------------------------------------------------------------------

Wireless Communications
NASD Rule 2212(e) states that the provisions set forth in the rule
are applicable to members telemarketing or making telephone
solicitations calls to wireless telephone numbers. Proposed FINRA Rule
3230(e) would clarify that the application of the rule also applies to
persons associated with a member making outbound telephone calls to
wireless telephone numbers.
Outsourcing Telemarketing
NASD Rule 2212(f) states that 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
the rule. Proposed FINRA Rule 3230(f) would clarify that members must
consider whether the entity or person that a member uses for
outsourcing, must be appropriately registered or licensed, where
required.
Unencrypted Consumer Account Numbers
Proposed FINRA Rule 3230(h) would prohibit a member or person
associated with a member from disclosing or receiving, for
consideration, unencrypted consumer account numbers for use in
telemarketing. The proposed rule change is substantially similar to the
FTC's provision regarding unencrypted consumer account numbers.\19\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\20\ Additionally, the proposed rule change would
define ``unencrypted'' as not only complete, visible account numbers,
whether provided in lists or singly, but also encrypted information
with a key to its decryption. The proposed definition is substantially
similar to the view taken by the FTC.\21\
---------------------------------------------------------------------------

\19\ See 16 CFR 310.4(a)(6).
\20\ See FTC, Telemarketing Sales Rule, 68 FR 4580 (January 29,
2003) at 4615.
\21\ See id. at 4616.
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Submission of Billing Information
Proposed FINRA Rule 3230(i) would require, for any telemarketing
transaction, a member or person associated with a member to obtain the
express informed consent of the person to be charged, and to be charged
using the identified account. If the telemarketing transaction involves
preacquired account information and a free-to-pay conversion feature,
the member or person associated with a member would have to: (1) Obtain
from the customer, at a minimum, the last four digits of the account
number to be charged; (2) obtain from the customer an express agreement
to be charged and to be charged using the identified account number;
and (3) make and maintain an audio recording of the entire
telemarketing transaction. For any other telemarketing transaction
involving preacquired account information, the member or person
associated with a member would have to: (1) Identify the account to be
charged with sufficient specificity for the customer to understand what
account will be charged; and (2) obtain from the customer an express
agreement to be charged and to be charged using the identified account
number. The proposed rule change is substantially similar to the FTC's
provision regarding the submission of billing information.\22\ The FTC
provided a discussion of the provision when it was adopted pursuant to
the Prevention Act.\23\
---------------------------------------------------------------------------

\22\ See 16 CFR 310.4(a)(7).
\23\ See FTC, supra note 20, at 4615.

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[[Page 67789]]

Abandoned Calls
Proposed FINRA Rule 3230(j) would prohibit a member or person
associated with a member from abandoning any outbound telemarketing
call. The abandoned calls prohibition would be subject to a ``safe
harbor'' under proposed subparagraph (j)(2) that requires: (1) The
member or person associated with a member to employ technology that
ensures abandonment of no more than three percent of all calls answered
by a person, measured over the duration of a single calling campaign,
if less than 30 days, or separately over each successive 30-day period
or portion thereof that the campaign continues; (2) the member or
person associated with a member, for each telemarketing call placed,
allows the telephone to ring for at least 15 seconds or four rings
before disconnecting an unanswered call; (3) whenever a person
associated with a member is not available to speak with the person
answering the telemarketing call within two seconds after the person's
completed greeting, the member or person associated with a member
promptly plays a recorded message stating the name and telephone number
of the member or person associated with a member on whose behalf the
call was placed; and (4) the member to maintain records documenting
compliance with the ``safe harbor.'' The proposed rule change is
substantially similar to the FTC's provisions regarding abandoned
calls.\24\ The FTC provided a discussion of the provisions when they
were adopted pursuant to the Prevention Act.\25\
---------------------------------------------------------------------------

\24\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
\25\ See FTC, supra note 20, at 4641.
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Prerecorded Messages
Proposed FINRA Rule 3230(k) would prohibit a member or person
associated with a member from initiating any outbound telemarketing
call that delivers a prerecorded message without a person's express
written agreement to receive such calls. The proposed rule change also
would require that all prerecorded telemarketing calls provide
specified opt-out mechanisms so that a person can opt out of future
calls. The prohibition would not apply to a prerecorded message
permitted for compliance with the ``safe harbor'' for abandoned calls
under proposed subparagraph (j)(2). The proposed rule change is
substantially similar to the FTC's provisions regarding prerecorded
messages.\26\ The FTC provided a discussion of the provisions when they
were adopted pursuant to the Prevention Act.\27\
---------------------------------------------------------------------------

\26\ See 16 CFR 310.4(b)(1)(v).
\27\ See Federal Trade Commission, Telemarketing Sales Rule, 73
FR 51164 (August 29, 2008).
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Credit Card Laundering
Proposed FINRA Rule 3230(l) would prohibit credit card laundering,
the practice of depositing into the credit card system a sales draft
that is not the result of a credit card transaction between the
cardholder and the member. Except as expressly permitted, the proposed
rule change would prohibit a member or person associated with a member
from: (1) Presenting to or depositing into, the credit card system for
payment, a credit card sales draft generated by a telemarketing
transaction that is not the result of a telemarketing credit card
transaction between the cardholder and the member; (2) employing,
soliciting, or otherwise causing a merchant, or an employee,
representative or agent of the merchant, to present to or to deposit
into the credit card system for payment, a credit card sales draft
generated by a telemarketing transaction that is not the result of a
telemarketing credit card transaction between the cardholder and the
merchant; or (3) obtaining access to the credit card system through the
use of a business relationship or an affiliation with a merchant, when
such access is not authorized by the merchant agreement or the
applicable credit card system. The proposed rule change is
substantially similar to the FTC's provisions regarding credit card
laundering.\28\ The FTC provided a discussion of the provisions when
they were adopted pursuant to the Prevention Act.\29\
---------------------------------------------------------------------------

\28\ See 16 CFR 310.2.
\29\ See Federal Trade Commission, Telemarketing Sales Rule, 60
FR 43842 (August 23, 1995) at 43852.
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Definitions
Proposed FINRA Rule 3230(m) would adopt definitions that are
substantially similar to the FTC's definitions.\30\ The proposed rule
change would adopt substantially similar definitions of ``acquirer,''
\31\ ``billing information,'' \32\ ``caller identification service,''
\33\ ``cardholder,'' \34\ ``charitable contribution,'' \35\ ``credit,''
\36\ ``credit card,'' \37\ ``credit card sales draft,'' \38\ ``credit
card system,'' \39\ ``customer,'' \40\ ``donor,'' \41\ ``free-to-pay
conversion,'' \42\ ``merchant,'' \43\ ``merchant agreement,'' \44\
``outbound telephone call,'' \45\ ``person'' \46\ and ``preacquired
account information.'' \47\ Additionally, the proposed rule change
amends the definition of ``telemarketing'' to track the FTC definition
and deletes the reference to ``telephone solicitation.'' The FTC
provided a discussion of each definition when they were adopted
pursuant to the Prevention Act.\48\
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\30\ See 16 CFR 310.2.
\31\ See 16 CFR 310.2(a).
\32\ See 16 CFR 310.2(c).
\33\ See 16 CFR 310.2(d).
\34\ See 16 CFR 310.2(e).
\35\ See 16 CFR 310.2(f).
\36\ See 16 CFR 310.2(h).
\37\ See 16 CFR 310.2(i).
\38\ See 16 CFR 310.2(j).
\39\ See 16 CFR 310.2(k).
\40\ See 16 CFR 310.2(l).
\41\ See 16 CFR 310.2(n).
\42\ See 16 CFR 310.2(p).
\43\ See 16 CFR 310.2(s).
\44\ See 16 CFR 310.2(t).
\45\ See 16 CFR 310.2(v).
\46\ See 16 CFR 310.2(w).
\47\ See 16 CFR 310.2(x).
\48\ See FTC, supra note 29, at 43843; see also FTC, supra note
20, at 4587.
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Technical and Conforming Changes
The proposed rule change also would make a number of minor
technical and conforming changes. First, proposed FINRA Rule 3230(m)
would renumber and make minor technical changes to the terms ``account
activity,'' ``broker-dealer of record'' and ``established business
relationship.'' Second, proposed FINRA Rule 3230 would amend paragraphs
(a), (b) and (c) by replacing the term ``telephone solicitation'' with
the term ``outbound telephone call.'' Third, proposed FINRA Rule
3230(d) would replace the term ``telemarketing call'' with the term
``outbound telephone call.'' Fourth, the proposed rule change would
update a reference to an ``established business relationship'' in
subparagraph (a)(1)(A). Finally, the proposed rule change would amend
paragraph (b) to clarify that a signed, written agreement may be
obtained electronically under the E-Sign Act.
FINRA will announce the implementation date of the proposed rule
change in a Regulatory Notice to be published no later than 90 days
following Commission approval. The implementation date will be no later
than 180 days following Commission approval.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\49\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in

[[Page 67790]]

general, to protect investors and the public interest. FINRA believes
that the proposed rule change will protect investors and the public
interest by continuing to prohibit deceptive and other abusive
telemarketing acts or practices.
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\49\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

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

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

Written comments were neither solicited nor received.

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

Within 45 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 or disapprove 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. 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 email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2011-059 on the subject line.

Paper Comments

Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2011-059. This
file number should be included on the subject line if email 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2011-059 and should be
submitted on or before November 23, 2011.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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\50\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28348 Filed 11-1-11; 8:45 am]
BILLING CODE 8011-01-P

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