Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Deleting the Rule Text of NYSE Arca Rule 9.20(b), Which Addresses Telemarketing, and Adopting New Rule Text to NYSE Arca Rule 9.20(b) To Conform to FINRA's Telemarketing Rule, 41849-41854 [2012-17173]
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17198 Filed 7–13–12; 8:45 am]
BILLING CODE 8011–01–P
proposed rule change. The text of those
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 parts of such
statements.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67372; File No. SR–
NYSEARCA–2012–54]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Deleting the Rule Text of
NYSE Arca Rule 9.20(b), Which
Addresses Telemarketing, and
Adopting New Rule Text to NYSE Arca
Rule 9.20(b) To Conform to FINRA’s
Telemarketing Rule
July 10, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 2 and Rule 19b–4
thereunder,3 notice is hereby given that,
on June 25, 2012, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the Exchange.
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
The Exchange proposes to delete the
rule text of NYSE Arca Rule 9.20(b),
which addresses telemarketing, and
adopt new rule text that is substantially
similar to FINRA Rule 3230. The text of
the proposed rule change is available on
the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
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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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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The Exchange proposes to delete the
rule text of NYSE Arca Rule 9.20(b),
which addresses telemarketing, and
adopt new rule text that is substantially
similar to FINRA Rule 3230.4
Proposed Rule Change
The Exchange proposes to delete the
rule text of NYSE Arca Rule 9.20(b) and
adopt new rule text to NYSE Arca Rule
9.20(b) to conform to the changes
adopted by FINRA for telemarketing.
FINRA adopted NASD Rule 2212 as
FINRA Rule 3230, taking into account
FINRA Incorporated New York Stock
Exchange LLC (‘‘NYSE’’) Rule 440A and
NYSE Interpretation 440A/01. FINRA
Rule 3230 adds provisions that are
substantially similar to Federal Trade
Commission (‘‘FTC’’) rules that prohibit
deceptive and other abusive
telemarketing acts or practices.
NYSE Arca Rule 9.20(b) and NASD
Rule 2212 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 the Exchange 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
4 See Securities Exchange Act Release No. 66279
(January 30, 2012), 77 FR 5611 (February 3, 2012)
(SR–FINRA–2011–059). FINRA’s rule change will
become effective on July 9, 2012. See FINRA
Regulatory Notice 12–17.
5 15 U.S.C. 6101–6108.
6 15 U.S.C. 6102.
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41849
national do-not-call registry.7 Pursuant
to the Prevention Act, the Commission
requested that FINRA and the Exchange
amend their telemarketing rules to
include a requirement that their
members participate in the national donot-call registry. In 2004, the
Commission approved amendments to
NASD Rule 2212 requiring member
firms to participate in the national donot-call registry.8 The following year,
the Commission approved amendments
to NYSE Arca Rule 9.20(b), 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 In 2011, Commission staff
directed all exchanges and FINRA to
conduct a review of their telemarketing
rules and propose rule amendments that
provide protections that are at least as
strong as those provided by the FTC’s
telemarketing rules. FINRA’s adoption
of FINRA Rule 3230 reflects
amendments to NASD Rule 2212 and
FINRA Incorporated NYSE Rule 440A
that update those rules to meet the
standards of the Prevention Act.11
The proposed rule change, as directed
by the Commission staff, adopts
provisions in proposed NYSE Arca Rule
9.20(b) that are substantially similar to
the FTC’s current rules that prohibit
deceptive and other abusive
telemarketing acts or practices as
described below.12
Telemarketing Requirements
Proposed NYSE Arca Rule 9.20(b)(1)
provides that no OTP Firm, OTP Holder,
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)
(Order Approving File No. SR–NASD–2003–131).
9 See Securities Exchange Act Release No. 54282
(August 8, 2006), 71 FR 46534 (August 14, 2006)
(Order Approving File No. SR–PCX–2005–54).
10 15 U.S.C. 6102.
11 See Securities Exchange Act Release No. 65645
(October 27, 2011), 76 FR 67787 (November 2, 2011)
(Order Approving File No. SR–FINRA–2011–059).
12 The text of proposed NYSE Arca Rule 9.20(b)
would be the same as FINRA Rule 3230, except that
(i) the Exchange would substitute the terms ‘‘OTP
Firm’’ and ‘‘OTP Holder’’ for ‘‘member;’’ and (ii) the
Exchange would substitute the term ‘‘Associated
Person’’ for ‘‘person associated with a member.’’
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
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or Associated Person shall initiate any
outbound telephone call 13 to:
(1) 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 the OTP Firm or OTP Holder has
an established business relationship 14
with the person pursuant to paragraph
9.20(b)(13)(L)(i), the OTP Firm or OTP
Holder has received that person’s prior
express invitation or permission, or the
person called is a broker or dealer;
(2) Any person that previously has
stated that he or she does not wish to
13 An ‘‘outbound telephone call’’ is a telephone
call initiated by a telemarketer to induce the
purchase of goods or services or to solicit a
charitable contribution from a donor. A ‘‘customer’’
is any person who is or may be required to pay for
goods or services through telemarketing. A ‘‘donor’’
means any person solicited to make a charitable
contribution. A ‘‘person’’ is any individual, group,
unincorporated association, limited or general
partnership, corporation, or other business entity.
‘‘Telemarketing’’ means consisting of or relating to
a plan, program, or campaign involving at least one
outbound telephone call, for example cold-calling.
The term does not include the solicitation of sales
through the mailing of written marketing materials,
when the person making the solicitation does not
solicit customers by telephone but only receives
calls initiated by customers in response to the
marketing materials and during those calls takes
orders only without further solicitation. For
purposes of the previous sentence, the term ‘‘further
solicitation’’ does not include providing the
customer with information about, or attempting to
sell, anything promoted in the same marketing
materials that prompted the customer’s call. See
proposed NYSE Arca Rule 9.20(b)(13)(K), (N), (P),
(Q), and (T); see also FINRA Rule 3230(m)(11), (14),
(16), (17), and (20); and 16 CFR 310.2(f), (l), (n), (v),
(w), and (dd).
14 An ‘‘established business relationship’’ is a
relationship between an OTP Firm or OTP Holder
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 OTP Firm or
OTP Holder or at a clearing firm that provides
clearing services to the OTP Firm or OTP Holder
within the 18 months immediately preceding the
date of an outbound telephone call; (b) the OTP
Firm or OTP Holder is the broker-dealer of record
for an account of the person within the 18 months
immediately preceding the date of an outbound
telephone call; or (c) the person has contacted the
OTP Firm or OTP Holder to inquire about a product
or service offered by the OTP Firm or OTP Holder
within the three months immediately preceding the
date of an outbound telephone call. A person’s
established business relationship with an OTP
Holder does not extend to the OTP Firm or OTP
Holder’s affiliated entities unless the person would
reasonably expect them to be included. Similarly,
a person’s established business relationship with an
OTP Firm or OTP Holder’s affiliate does not extend
to the OTP Firm or OTP Holder unless the person
would reasonably expect the OTP Firm or OTP
Holder to be included. The term ‘‘account activity’’
includes, but is not 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 OTP Firm or OTP Holder. The term ‘‘brokerdealer of record’’ refers to the broker or dealer
identified on a customer’s account application for
accounts held directly at a mutual fund or variable
insurance product issuer. See proposed NYSE Arca
Rule 9.20(b)(13)(A), (D), and (L); see also 16 CFR
310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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receive an outbound telephone call
made by or on behalf of the OTP Firm
or OTP Holder; 15 or
(3) Any person who has registered his
or her telephone number on the FTC’s
national do-not-call registry.
The proposed rule change is
substantially similar to the FTC’s
provisions regarding abusive
telemarketing acts or practices.16 The
FTC provided a discussion of the
provision when it was adopted pursuant
to the Prevention Act.17
persons on the FTC’s do-not-call
registry.22 The FTC provided a
discussion of the provision when it was
adopted pursuant to the Prevention
Act.23
business relationship exception to that national donot-call list provision for that OTP Firm or OTP
Holder even if the person continues to do business
with the OTP Firm or OTP Holder.
19 Such permission must be evidenced by a
signed, written agreement (which may be obtained
electronically under the E-Sign Act (See 15 U.S.C.
7001 et seq.) between the person and OTP Firm or
OTP Holder which states that the person agrees to
be contacted by the OTP Firm or OTP Holder and
includes the telephone number to which the calls
may be placed.
20 The term ‘‘personal relationship’’ means any
family member, friend, or acquaintance of the
person making an outbound telephone call. See
proposed NYSE Arca Rule 9.20(b)(13)(R); see also
FINRA Rule 3230(m)(18).
21 See supra note 14; see also FINRA Rule
3230(a).
Procedures
Proposed NYSE Arca Rule 9.20(b)(4)
adopts procedures that OTP Firms and
OTP Holders must institute to comply
Safe Harbor Provision
Proposed NYSE Arca Rule 9.20(b)(3)
provides that an OTP Firm, OTP Holder,
or Associated Person making outbound
telephone calls will not be liable for
initiating any outbound telephone call
to any person who has registered his or
her telephone number on the FTC’s
National Do-Not-Call List Exceptions
national do-not-call registry if the OTP
Proposed NYSE Arca Rule 9.20(b)(2)
Firm, OTP Holder, or Associated Person
provides that an OTP Firm or OTP
demonstrates that the violation is the
Holder making outbound telephone
result of an error and that as part of the
calls will not be liable for initiating any
OTP Firm or OTP Holder’s routine
outbound telephone call to any person
business practice, it meets the following
who has registered his or her telephone
standards:
(1) The OTP Firm or OTP Holder has
number on the FTC’s national do-notestablished and implemented written
call registry if:
(1) The OTP Firm or OTP Holder has
procedures to comply with the national
an established business relationship
do-not-call rules;
(2) The OTP Firm or OTP Holder has
with the recipient of the call; 18
(2) The OTP Firm or OTP Holder has
trained its personnel, and any entity
obtained the person’s prior express
assisting in its compliance, in
invitation or permission; 19 or
procedures established pursuant to the
(3) The Associated Person making the national do-not-call rules;
(3) The OTP Firm or OTP Holder has
call has a personal relationship 20 with
maintained and recorded a list of
the recipient of the call.
The proposed rule change modifies
telephone numbers that it may not
the established business relationship
contact; and
(4) The OTP Firm or OTP Holder uses
exception in NYSE Arca Rule 9.20(b)
a process to prevent outbound
and the definition for ‘‘established
telephone calls to any telephone
business relationships,’’ which is
number on any list established pursuant
substantially similar to the FTC’s
definition of that term.21 In addition, the to the do-not-call rules, employing a
version of the national do-not-call
proposed rule change is substantially
similar to the FTC’s provision regarding registry obtained from the administrator
of the registry no more than 31 days
an exception to the prohibition on
prior to the date any call is made, and
making outbound telephone calls to
maintains records documenting this
15 This restriction was previously included under
process.
NYSE Arca Rule 9.20(b)(1). See the discussion
The proposed rule change is
below under Procedures.
substantially similar to the FTC’s safe
16 See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c);
harbor to the prohibition on making
see also FINRA Rule 3230(a).
outbound telephone calls to persons on
17 See Federal Trade Commission, Telemarketing
the FTC’s national do-not-call registry.24
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
The FTC provided a discussion of the
Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
provision when it was adopted pursuant
18 A person’s request to be placed on the firmto the Prevention Act.25
specific do-not-call list terminates the established
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22 See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA
Rule 3230(b).
23 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
24 See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA
Rule 3230(c).
25 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) at 4628; and
Federal Trade Commission, Telemarketing Sales
Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
with NYSE Arca Rule 9.20(b)(1) prior to
engaging in telemarketing. These
procedures are substantially similar to
the procedural requirements under
NYSE Arca Rule 9.20(b)(4); however,
the proposed rule change deletes the
requirement that an OTP Holder honor
a firm-specific do-not-call request for
five years from the time the request is
made. Additionally, the proposed rule
change clarifies that the request not to
receive further calls would come from a
person. The procedures must meet the
following minimum standards:
(1) OTP Firms and OTP Holders must
have a written policy for maintaining
their do-not-call lists.
(2) Personnel engaged in any aspect of
telemarketing must be informed and
trained in the existence and use of the
OTP Firm or OTP Holder’s do-not-call
list.
(3) If an OTP Firm or OTP Holder
receives a request from a person not to
receive calls from that OTP Firm or OTP
Holder, the OTP Firm or OTP Holder
must record the request and place the
person’s name, if provided, and
telephone number on its do-not-call list
at the time the request is made.26
(4) OTP Firms, OTP Holders, or
Associated Persons making an outbound
telephone call must make certain caller
disclosures set forth in NYSE Arca Rule
9.20(b)(4)(D).
(5) In the absence of a specific request
by the person to the contrary, a person’s
do-not-call request shall apply to the
OTP Firm or OTP Holder 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 call and the
product being advertised.
(6) An OTP Firm or OTP Holder
making outbound telephone calls must
maintain a record of a person’s request
not to receive further calls.
Inclusion of this requirement to adopt
these procedures will not create any
new obligations on OTP Firms or OTP
Holders, as they are already subject to
identical provisions under FCC
telemarketing regulations.27
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Wireless Communications
Proposed NYSE Arca Rule 9.20(b)(5)
states that the provisions set forth in the
26 OTP Firms and OTP Holders must honor a
person’s do-not-call request within a reasonable
time from the date the request is made, which may
not exceed 30 days from the date of the request. If
these requests are recorded or maintained by a party
other than the OTP Firm or OTP Holder on whose
behalf the outbound telephone call is made, the
OTP Firm or OTP Holder on whose behalf the
outbound telephone call is made will still be liable
for any failures to honor the do-not-call request.
27 See 47 CFR 64.1200(d); see also FINRA Rule
3230(d).
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rule are applicable to OTP Firms and
OTP Holders telemarketing or making
telephone solicitations calls to wireless
telephone numbers. In addition,
proposed NYSE Arca Rule 9.20(b)(5)
clarifies that the application of the rule
also applies to Associated Persons
making outbound telephone calls to
wireless telephone numbers.28
Outsourcing Telemarketing
NYSE Arca Rule 9.20(b)(6) states that
if an OTP Firm or OTP Holder uses
another entity to perform telemarketing
services on its behalf, the OTP Firm or
OTP Holder remains responsible for
ensuring compliance with all provisions
contained in the rule. Proposed NYSE
Arca Rule 9.20(b)(6) also clarifies that
OTP Firms and OTP Holders must
consider whether the entity or person
that an OTP Firm or OTP Holder uses
for outsourcing, must be appropriately
registered or licensed, where required.29
Caller Identification Information
Proposed NYSE Arca Rule 9.20(b)(7)
provides that any OTP Firm or OTP
Holder that engages in telemarketing
must transmit or cause to be transmitted
the telephone number, and, when made
available by the OTP Firm or OTP
Holder’s telephone carrier, the name of
the OTP Firm or OTP Holder, to any
caller identification service in use by a
recipient of an outbound telephone call.
The telephone number so provided
must permit any person to make a donot-call request during regular business
hours. In addition, any OTP Firm or
OTP Holder that engages in
telemarketing is prohibited from
blocking the transmission of caller
identification information.30
These provisions are similar to the
caller identification provision in the
FTC rules.31 Inclusion of these caller
identification provisions in this
proposed rule change will not create
any new obligations on OTP Firms or
OTP Holders, as they are already subject
to identical provisions under FCC
telemarketing regulations.32
Unencrypted Consumer Account
Numbers
Proposed NYSE Arca Rule 9.20(b)(8)
prohibits an OTP Firm, OTP Holder, or
Associated Person from disclosing or
receiving, for consideration,
also FINRA Rule 3230(e).
also FINRA Rule 3230(f).
30 Caller identification information includes the
telephone number and, when made available by the
OTP Firm or OTP Holder’s telephone carrier, the
name of the OTP Firm or OTP Holder.
31 See 16 CFR 310.4(a)(8); see also FINRA Rule
3230(g).
32 See 47 CFR 64.1601(e).
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28 See
29 See
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41851
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.33 The FTC provided a
discussion of the provision when it was
adopted pursuant to the Prevention
Act.34 Additionally, the proposed rule
change defines ‘‘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.35
Submission of Billing Information
The proposed rule change provides
that, for any telemarketing transaction,
no OTP Firm, OTP Holder, or
Associated Person may submit billing
information 36 for payment without the
express informed consent of the
customer. Proposed NYSE Arca Rule
9.20(b)(9) requires, for any
telemarketing transaction, an OTP Firm,
OTP Holder, or Associated Person 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 37 and
a free-to-pay conversion 38 feature, the
OTP Firm, OTP Holder, or Associated
Person must:
(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
33 See 16 CFR 310.4(a)(6); see also FINRA Rule
3230(h).
34 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4615.
35 See id. at 4616.
36 The term ‘‘billing information’’ means any data
that enables any person to access a customer’s or
donor’s account, such as a credit or debit card
number, a brokerage, checking, or savings account
number, or a mortgage loan account number. See
proposed NYSE Arca Rule 9.20(b)(13)(C).
37 The term ‘‘preacquired account information’’
means any information that enables an OTP Firm,
OTP Holder, or Associated Person to cause a charge
to be placed against a customer’s or donor’s account
without obtaining the account number directly from
the customer or donor during the telemarketing
transaction pursuant to which the account will be
charged. See proposed NYSE Arca Rule
9.20(b)(13)(S).
38 The term ‘‘free-to-pay conversion’’ means, in an
offer or agreement to sell or provide any goods or
services, a provision under which a customer
receives a product or service for free for an initial
period and will incur an obligation to pay for the
product or service if he or she does not take
affirmative action to cancel before the end of that
period. See proposed NYSE Arca Rule
9.20(b)(13)(M).
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(3) Make and maintain an audio
recording of the entire telemarketing
transaction.
For any other telemarketing
transaction involving preacquired
account information, the OTP Firm,
OTP Holder, or Associated Person must:
(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.39 The FTC provided
a discussion of the provision when it
was adopted pursuant to the Prevention
Act.40
Abandoned Calls
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Proposed NYSE Arca Rule 9.20(b)(10)
prohibits an OTP Firm, OTP Holder, or
Associated Person from abandoning 41
any outbound telemarketing call. The
abandoned calls prohibition is subject to
a ‘‘safe harbor’’ under proposed
subparagraph (10)(B) that requires:
(1) The OTP Firm, OTP Holder, or
Associated Person 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 OTP Firm, OTP Holder, or
Associated Person, 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 an Associated Person is
not available to speak with the person
answering the telemarketing call within
two seconds after the person’s
completed greeting, the OTP Firm, OTP
Holder, or Associated Person promptly
plays a recorded message stating the
name and telephone number of the OTP
Firm, OTP Holder, or Associated Person
on whose behalf the call was placed;
and
(4) The OTP Firm or OTP Holder to
maintain records documenting
compliance with the ‘‘safe harbor.’’
39 See 16 CFR 310.4(a)(7); see also FINRA Rule
3230(i).
40 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4615.
41 An outbound telephone call is ‘‘abandoned’’ if
the called person answers it and the call is not
connected to an OTP Firm, OTP Holder, or
Associated Person within two seconds of the called
person’s completed greeting.
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The proposed rule change is
substantially similar to the FTC’s
provisions regarding abandoned calls.42
The FTC provided a discussion of the
provisions when they were adopted
pursuant to the Prevention Act.43
Prerecorded Messages
Proposed NYSE Arca Rule 9.20(b)(11)
prohibits an OTP Firm, OTP Holder, or
Associated Person from initiating any
outbound telemarketing call that
delivers a prerecorded message without
a person’s express written agreement 44
to receive such calls. The proposed rule
change also requires that all prerecorded
telemarketing calls provide specified
opt-out mechanisms so that a person
can opt out of future calls. The
prohibition does not apply to a
prerecorded message permitted for
compliance with the ‘‘safe harbor’’ for
abandoned calls under proposed
subparagraph (10)(B).
The proposed rule change is
substantially similar to the FTC’s
provisions regarding prerecorded
messages.45 The FTC provided a
discussion of the provisions when they
were adopted pursuant to the
Prevention Act.46
Credit Card Laundering
Proposed NYSE Arca Rule 9.20(b)(12)
prohibits credit card laundering, the
practice of depositing into the credit
card system 47 a sales draft that is not
the result of a credit card transaction
between the cardholder 48 and the OTP
42 See 16 CFR 310.4(b)(1)(iv); see also 16 CFR
310.4(b)(4).
43 See Federal Trade Commission, Telemarketing
Sales Rule, 68 FR 4580 (January 29, 2003) at 4641.
44 The express written agreement must: (a) Have
been obtained only after a clear and conspicuous
disclosure that the purpose of the agreement is to
authorize the OTP Firm or OTP Holder to place
prerecorded calls to such person; (b) have been
obtained without requiring, directly or indirectly,
that the agreement be executed as a condition of
purchasing any good or service; (c) evidence the
willingness of the called person to receive calls that
deliver prerecorded messages by or on behalf of the
OTP Firm or OTP Holder; and (d) include the
person’s telephone number and signature (which
may be obtained electronically under the E-Sign
Act).
45 See 16 CFR 310.4(b)(1)(v); see also FINRA Rule
3230(k).
46 See Federal Trade Commission, Telemarketing
Sales Rule, 73 FR 51164 (August 29, 2008) at 51165.
47 The term ‘‘credit card system’’ means any
method or procedure used to process credit card
transactions involving credit cards issued or
licensed by the operator of that system. The term
‘‘credit card’’ means any card, plate, coupon book,
or other credit device existing for the purpose of
obtaining money, property, labor, or services on
credit. The term ‘‘credit’’ means the right granted
by a creditor to a debtor to defer payment of debt
or to incur debt and defer its payment. See
proposed NYSE Arca Rule 9.20(b)(13)(G), (H), and
(J).
48 The term ‘‘cardholder’’ means a person to
whom a credit card is issued or who is authorized
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
Firm or OTP Holder. Except as
expressly permitted, the proposed rule
change prohibits an OTP Firm, OTP
Holder, or Associated Person from:
(1) Presenting to or depositing into,
the credit card system for payment, a
credit card sales draft 49 generated by a
telemarketing transaction that is not the
result of a telemarketing credit card
transaction between the cardholder and
the OTP Firm or OTP Holder;
(2) Employing, soliciting, or otherwise
causing a merchant,50 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 51 or the applicable credit
card system.
The proposed rule change is
substantially similar to the FTC’s
provisions regarding credit card
laundering.52 The FTC provided a
discussion of the provisions when they
were adopted pursuant to the
Prevention Act.53
Definitions
Proposed NYSE Arca Rule 9.20(b)(13)
adopts the following definitions, which
are substantially similar to the FTC’s
definitions of these terms: ‘‘acquirer,’’
to use a credit card on behalf of or in addition to
the person to whom the credit card is issued. See
proposed NYSE Arca Rule 9.20(b)(13)(F).
49 The term ‘‘credit card sales draft’’ means any
record or evidence of a credit card transaction. See
proposed NYSE Arca Rule 9.20(b)(13)(I).
50 The term ‘‘merchant’’ means a person who is
authorized under written contract with an acquirer
to honor or accept credit cards, or to transmit or
process for payment credit card payments, for the
purchase of goods or services or a charitable
contribution. The term ‘‘acquirer’’ means a business
organization, financial institution, or an agent of a
business organization or financial institution that
has authority from an organization that operates or
licenses a credit card system to authorize merchants
to accept, transmit, or process payment by credit
card through the credit card system for money,
goods or services, or anything else of value. A
‘‘charitable contribution’’ means any donation or
gift of money or any other thing of value, for
example a transfer to a pooled income fund. See
proposed NYSE Arca Rule 9.20(b)(13)(B) and (N).
51 The term ‘‘merchant agreement’’ means a
written contract between a merchant and an
acquirer to honor or accept credit cards, or to
transmit or process for payment credit card
payments, for the purchase of goods or services or
charitable contribution. See proposed NYSE Arca
Rule 9.20(b)(13)(O).
52 See 16 CFR 310.2; see also FINRA Rule 3230(l).
53 See Federal Trade Commission, Telemarketing
Sales Rule, 60 FR 43842 (August 23, 1995) at 43852.
E:\FR\FM\16JYN1.SGM
16JYN1
Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
‘‘billing information,’’ ‘‘caller
identification service,’’ ‘‘cardholder,’’
‘‘charitable contribution,’’ ‘‘credit,’’
‘‘credit card,’’ ‘‘credit card sales draft,’’
‘‘credit card system,’’ ‘‘customer,’’
‘‘donor,’’ ‘‘established business
relationship,’’ ‘‘free-to-pay conversion,’’
‘‘merchant,’’ ‘‘merchant agreement,’’
‘‘outbound telephone call,’’ ‘‘person,’’
‘‘preacquired account information,’’ and
‘‘telemarketing’’.54 The FTC provided a
discussion of each definition when they
were adopted pursuant to the
Prevention Act.
The Exchange proposes make the new
rule text to NYSE Arca Rule 9.20(b)
effective on the same date as FINRA
makes FINRA Rule 3230 effective.55
srobinson on DSK4SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Exchange Act 56 in
general, and furthers the objectives of
Section 6(b)(5) 57 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. Specifically, the Exchange
believes that the proposed rule change
supports the objectives of the Exchange
Act by providing greater harmonization
between NYSE Arca Rules and FINRA
Rules of similar purpose, resulting in
less burdensome and more efficient
regulatory compliance. In particular,
NYSE Arca OTP Holders that are also
FINRA members are subject to both
NYSE Arca Rule 9.20(b) and FINRA
Rule 3230 and harmonizing these two
rules would promote just and equitable
principles of trade by requiring a single
standard for telemarketing. In addition,
adopting new rule text to NYSE Arca
Rule 9.20(b) will assure that the
Exchange’s rules governing
telemarketing meet the standards set
54 See proposed NYSE Arca Rule 9.20(b)(13)(B),
(C), (E), (F), (G), (H), (I), (J), (K), (L), (M), (N), (O),
(P), (Q), (S), and (T); and 16 CFR 310.2(a), (c), (d),
(e), (f), (h), (i), (j), (k), (l), (n), (o), (p), (s), (t), (v),
(w), (x), and (dd); see also FINRA Rule 3230(m)(2),
(3), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14),
(15), (16), (17), (19), and (20). The proposed rule
change also adopts definitions of ‘‘account
activity,’’ ‘‘broker-dealer of record,’’ and ‘‘personal
relationship’’ that are substantially similar to
FINRA’s definitions of these terms. See proposed
NYSE Arca Rule 9.20(b)(13)(A), (D), and (R) and
FINRA Rule 3230(m)(1), (4), and (18); see also 47
CFR 64.1200(t)(14) (FCC’s definition of ‘‘personal
relationship’’).
55 See supra note 4.
56 15 U.S.C. 78f(b).
57 15 U.S.C. 78f(b)(5).
VerDate Mar<15>2010
16:32 Jul 13, 2012
Jkt 226001
forth in the Prevention Act. To the
extent the Exchange has proposed
changes that differ from the FINRA
version of the NYSE Arca Rules, it
believes such changes are technical in
nature and do not change the substance
of the proposed NYSE Arca Rule. The
Exchange also believes that the
proposed rule change will update and
clarify the requirements governing
telemarketing, which will promote just
and equitable principles of trade and
help to protect investors.
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 that is 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
The Exchange neither solicited nor
received written comments with respect
to the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Exchange Act 58
and Rule 19b–4(f)(6) thereunder.59
Because the proposed rule change does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Exchange Act and Rule 19b–
4(f)(6)(iii) thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 60 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),61 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing.
At any time within 60 days of the
filing of such proposed rule change, the
PO 00000
58 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
60 17 CFR 240.19b–4(f)(6).
61 17 CFR 240.19b–4(f)(6)(iii).
59 17
Frm 00113
Fmt 4703
Sfmt 4703
41853
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Exchange Act.
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 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 email to rulecomments@sec.gov. Please include File
Number SR–NYSEARCA–2012–54 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–NYSEARCA–2012–54. 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 Section, 100 F Street NE.,
Washington, DC 20549–1090 on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing will
also be available for inspection and
copying at the NYSE’s principal office
and on its Internet Web site at
www.nyse.com. 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.
E:\FR\FM\16JYN1.SGM
16JYN1
41854
Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices
All submissions should refer to File
Number SR–NYSEARCA–2012–54 and
should be submitted on or before
August 6, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17173 Filed 7–13–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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
Exchange 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 those
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 parts of such
statements.
[Release No. 34–67373; File No. SR–
NYSEARCA–2012–53]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Deleting the Rule Text of
NYSE Arca Equities Rule 9.20(b),
Which Addresses Telemarketing, and
Adopting New Rule Text to NYSE Arca
Equities Rule 9.20(b) to Conform to
FINRA’s Telemarketing Rule
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b), which addresses telemarketing,
and adopt new rule text that is
substantially similar to FINRA Rule
3230.4
July 10, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) 2 and Rule 19b–4
thereunder,3 notice is hereby given that,
on June 25, 2012, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
srobinson on DSK4SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b), which addresses telemarketing,
and adopt new rule text that is
substantially similar to FINRA Rule
3230. The text of the proposed rule
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
4 See Securities Exchange Act Release No. 66279
(January 30, 2012), 77 FR 5611 (February 3, 2012)
(SR–FINRA–2011–059). FINRA’s rule change will
become effective on July 9, 2012. See FINRA
Regulatory Notice 12–17.
5 15 U.S.C. 6101–6108.
62 17
CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
VerDate Mar<15>2010
16:32 Jul 13, 2012
Proposed Rule Change
The Exchange proposes to delete the
rule text of NYSE Arca Equities Rule
9.20(b) and adopt new rule text to NYSE
Arca Equities Rule 9.20(b) to conform to
the changes adopted by FINRA for
telemarketing. FINRA adopted NASD
Rule 2212 as FINRA Rule 3230, taking
into account FINRA Incorporated New
York Stock Exchange LLC (‘‘NYSE’’)
Rule 440A and NYSE Interpretation
440A/01. FINRA Rule 3230 adds
provisions that are substantially similar
to Federal Trade Commission (‘‘FTC’’)
rules that prohibit deceptive and other
abusive telemarketing acts or practices.
NYSE Arca Equities Rule 9.20(b) and
NASD Rule 2212 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 the Exchange 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
Jkt 226001
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
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 the Exchange
amend their telemarketing rules to
include a requirement that their
members participate in the national donot-call registry. In 2004, the
Commission approved amendments to
NASD Rule 2212 requiring member
firms to participate in the national donot-call registry.8 The following year,
the Commission approved amendments
to NYSE Arca Rule 9.20(b), 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 In 2011, Commission staff
directed all exchanges and FINRA to
conduct a review of their telemarketing
rules and propose rule amendments that
provide protections that are at least as
strong as those provided by the FTC’s
telemarketing rules. FINRA’s adoption
of FINRA Rule 3230 reflects
amendments to NASD Rule 2212 and
FINRA Incorporated NYSE Rule 440A
that update those rules to meet the
standards of the Prevention Act.11
The proposed rule change, as directed
by the Commission staff, adopts
provisions in proposed NYSE Arca
Equities Rule 9.20(b) that are
substantially similar to the FTC’s
current rules that prohibit deceptive and
other abusive telemarketing acts or
practices as described below.12
6 15
U.S.C. 6102.
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)
(Order Approving File No. SR–NASD–2003–131).
9 See Securities Exchange Act Release No. 54283
(August 8, 2006), 71 FR 46534 (August 14, 2006)
(Order Approving File No. SR–PCX–2005–97).
10 15 U.S.C. 6102.
11 See Securities Exchange Act Release No. 65645
(October 27, 2011), 76 FR 67787 (November 2, 2011)
(Order Approving File No. SR–FINRA–2011–059).
12 The text of proposed NYSE Arca Equities Rule
9.20(b) would be the same as FINRA Rule 3230,
7 See
E:\FR\FM\16JYN1.SGM
16JYN1
]]>Agencies
[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41849-41854]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17173]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67372; File No. SR-NYSEARCA-2012-54]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Deleting the Rule
Text of NYSE Arca Rule 9.20(b), Which Addresses Telemarketing, and
Adopting New Rule Text to NYSE Arca Rule 9.20(b) To Conform to FINRA's
Telemarketing Rule
July 10, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that, on June 25, 2012, NYSE Arca, Inc. (the ``Exchange''
or ``NYSE Arca'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II and III below, which Items have been prepared by the Exchange. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delete the rule text of NYSE Arca Rule
9.20(b), which addresses telemarketing, and adopt new rule text that is
substantially similar to FINRA Rule 3230. The text of the proposed rule
change is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange 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 those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to delete the rule text of NYSE Arca Rule
9.20(b), which addresses telemarketing, and adopt new rule text that is
substantially similar to FINRA Rule 3230.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 66279 (January 30,
2012), 77 FR 5611 (February 3, 2012) (SR-FINRA-2011-059). FINRA's
rule change will become effective on July 9, 2012. See FINRA
Regulatory Notice 12-17.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes to delete the rule text of NYSE Arca Rule
9.20(b) and adopt new rule text to NYSE Arca Rule 9.20(b) to conform to
the changes adopted by FINRA for telemarketing. FINRA adopted NASD Rule
2212 as FINRA Rule 3230, taking into account FINRA Incorporated New
York Stock Exchange LLC (``NYSE'') Rule 440A and NYSE Interpretation
440A/01. FINRA Rule 3230 adds provisions that are substantially similar
to Federal Trade Commission (``FTC'') rules that prohibit deceptive and
other abusive telemarketing acts or practices.
NYSE Arca Rule 9.20(b) and NASD Rule 2212 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 the Exchange 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\
---------------------------------------------------------------------------
\5\ 15 U.S.C. 6101-6108.
\6\ 15 U.S.C. 6102.
---------------------------------------------------------------------------
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 the Exchange
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 Arca Rule 9.20(b),
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\
---------------------------------------------------------------------------
\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) (Order Approving File No. SR-
NASD-2003-131).
\9\ See Securities Exchange Act Release No. 54282 (August 8,
2006), 71 FR 46534 (August 14, 2006) (Order Approving File No. SR-
PCX-2005-54).
---------------------------------------------------------------------------
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\ In 2011, Commission staff directed all exchanges
and FINRA to conduct a review of their telemarketing rules and propose
rule amendments that provide protections that are at least as strong as
those provided by the FTC's telemarketing rules. FINRA's adoption of
FINRA Rule 3230 reflects amendments to NASD Rule 2212 and FINRA
Incorporated NYSE Rule 440A that update those rules to meet the
standards of the Prevention Act.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 6102.
\11\ See Securities Exchange Act Release No. 65645 (October 27,
2011), 76 FR 67787 (November 2, 2011) (Order Approving File No. SR-
FINRA-2011-059).
---------------------------------------------------------------------------
The proposed rule change, as directed by the Commission staff,
adopts provisions in proposed NYSE Arca Rule 9.20(b) that are
substantially similar to the FTC's current rules that prohibit
deceptive and other abusive telemarketing acts or practices as
described below.\12\
---------------------------------------------------------------------------
\12\ The text of proposed NYSE Arca Rule 9.20(b) would be the
same as FINRA Rule 3230, except that (i) the Exchange would
substitute the terms ``OTP Firm'' and ``OTP Holder'' for ``member;''
and (ii) the Exchange would substitute the term ``Associated
Person'' for ``person associated with a member.''
---------------------------------------------------------------------------
Telemarketing Requirements
Proposed NYSE Arca Rule 9.20(b)(1) provides that no OTP Firm, OTP
Holder,
[[Page 41850]]
or Associated Person shall initiate any outbound telephone call \13\
to:
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\13\ An ``outbound telephone call'' is a telephone call
initiated by a telemarketer to induce the purchase of goods or
services or to solicit a charitable contribution from a donor. A
``customer'' is any person who is or may be required to pay for
goods or services through telemarketing. A ``donor'' means any
person solicited to make a charitable contribution. A ``person'' is
any individual, group, unincorporated association, limited or
general partnership, corporation, or other business entity.
``Telemarketing'' means consisting of or relating to a plan,
program, or campaign involving at least one outbound telephone call,
for example cold-calling. The term does not include the solicitation
of sales through the mailing of written marketing materials, when
the person making the solicitation does not solicit customers by
telephone but only receives calls initiated by customers in response
to the marketing materials and during those calls takes orders only
without further solicitation. For purposes of the previous sentence,
the term ``further solicitation'' does not include providing the
customer with information about, or attempting to sell, anything
promoted in the same marketing materials that prompted the
customer's call. See proposed NYSE Arca Rule 9.20(b)(13)(K), (N),
(P), (Q), and (T); see also FINRA Rule 3230(m)(11), (14), (16),
(17), and (20); and 16 CFR 310.2(f), (l), (n), (v), (w), and (dd).
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(1) 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 the OTP Firm
or OTP Holder has an established business relationship \14\ with the
person pursuant to paragraph 9.20(b)(13)(L)(i), the OTP Firm or OTP
Holder has received that person's prior express invitation or
permission, or the person called is a broker or dealer;
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\14\ An ``established business relationship'' is a relationship
between an OTP Firm or OTP Holder 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 OTP Firm or OTP Holder or at a
clearing firm that provides clearing services to the OTP Firm or OTP
Holder within the 18 months immediately preceding the date of an
outbound telephone call; (b) the OTP Firm or OTP Holder is the
broker-dealer of record for an account of the person within the 18
months immediately preceding the date of an outbound telephone call;
or (c) the person has contacted the OTP Firm or OTP Holder to
inquire about a product or service offered by the OTP Firm or OTP
Holder within the three months immediately preceding the date of an
outbound telephone call. A person's established business
relationship with an OTP Holder does not extend to the OTP Firm or
OTP Holder's affiliated entities unless the person would reasonably
expect them to be included. Similarly, a person's established
business relationship with an OTP Firm or OTP Holder's affiliate
does not extend to the OTP Firm or OTP Holder unless the person
would reasonably expect the OTP Firm or OTP Holder to be included.
The term ``account activity'' includes, but is not 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 OTP Firm or OTP Holder. The term
``broker-dealer of record'' refers to the broker or dealer
identified on a customer's account application for accounts held
directly at a mutual fund or variable insurance product issuer. See
proposed NYSE Arca Rule 9.20(b)(13)(A), (D), and (L); see also 16
CFR 310.2(o) and FINRA Rule 3230(m)(1), (4), and (12).
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(2) 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
OTP Firm or OTP Holder; \15\ or
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\15\ This restriction was previously included under NYSE Arca
Rule 9.20(b)(1). See the discussion below under Procedures.
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(3) Any person who has registered his or her telephone number on
the FTC's national do-not-call registry.
The proposed rule change is substantially similar to the FTC's
provisions regarding abusive telemarketing acts or practices.\16\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\17\
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\16\ See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c); see also
FINRA Rule 3230(a).
\17\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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National Do-Not-Call List Exceptions
Proposed NYSE Arca Rule 9.20(b)(2) provides that an OTP Firm or OTP
Holder making outbound telephone calls will not be liable for
initiating any outbound telephone call to any person who has registered
his or her telephone number on the FTC's national do-not-call registry
if:
(1) The OTP Firm or OTP Holder has an established business
relationship with the recipient of the call; \18\
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\18\ 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 OTP
Firm or OTP Holder even if the person continues to do business with
the OTP Firm or OTP Holder.
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(2) The OTP Firm or OTP Holder has obtained the person's prior
express invitation or permission; \19\ or
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\19\ Such permission must be evidenced by a signed, written
agreement (which may be obtained electronically under the E-Sign Act
(See 15 U.S.C. 7001 et seq.) between the person and OTP Firm or OTP
Holder which states that the person agrees to be contacted by the
OTP Firm or OTP Holder and includes the telephone number to which
the calls may be placed.
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(3) The Associated Person making the call has a personal
relationship \20\ with the recipient of the call.
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\20\ The term ``personal relationship'' means any family member,
friend, or acquaintance of the person making an outbound telephone
call. See proposed NYSE Arca Rule 9.20(b)(13)(R); see also FINRA
Rule 3230(m)(18).
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The proposed rule change modifies the established business
relationship exception in NYSE Arca Rule 9.20(b) and the definition for
``established business relationships,'' which is substantially similar
to the FTC's definition of that term.\21\ In addition, the proposed
rule change is substantially similar to the FTC's provision regarding
an exception to the prohibition on making outbound telephone calls to
persons on the FTC's do-not-call registry.\22\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\23\
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\21\ See supra note 14; see also FINRA Rule 3230(a).
\22\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule
3230(b).
\23\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
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Safe Harbor Provision
Proposed NYSE Arca Rule 9.20(b)(3) provides that an OTP Firm, OTP
Holder, or Associated Person making outbound telephone calls will not
be liable for initiating any outbound telephone call to any person who
has registered his or her telephone number on the FTC's national do-
not-call registry if the OTP Firm, OTP Holder, or Associated Person
demonstrates that the violation is the result of an error and that as
part of the OTP Firm or OTP Holder's routine business practice, it
meets the following standards:
(1) The OTP Firm or OTP Holder has established and implemented
written procedures to comply with the national do-not-call rules;
(2) The OTP Firm or OTP Holder has trained its personnel, and any
entity assisting in its compliance, in procedures established pursuant
to the national do-not-call rules;
(3) The OTP Firm or OTP Holder has maintained and recorded a list
of telephone numbers that it may not contact; and
(4) The OTP Firm or OTP Holder uses a process to prevent outbound
telephone calls 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 31 days prior to the date any call is made, and maintains
records documenting this process.
The proposed rule change is substantially similar to the FTC's safe
harbor to the prohibition on making outbound telephone calls to persons
on the FTC's national do-not-call registry.\24\ The FTC provided a
discussion of the provision when it was adopted pursuant to the
Prevention Act.\25\
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\24\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule
3230(c).
\25\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Procedures
Proposed NYSE Arca Rule 9.20(b)(4) adopts procedures that OTP Firms
and OTP Holders must institute to comply
[[Page 41851]]
with NYSE Arca Rule 9.20(b)(1) prior to engaging in telemarketing.
These procedures are substantially similar to the procedural
requirements under NYSE Arca Rule 9.20(b)(4); however, the proposed
rule change deletes the requirement that an OTP Holder honor a firm-
specific do-not-call request for five years from the time the request
is made. Additionally, the proposed rule change clarifies that the
request not to receive further calls would come from a person. The
procedures must meet the following minimum standards:
(1) OTP Firms and OTP Holders must have a written policy for
maintaining their do-not-call lists.
(2) Personnel engaged in any aspect of telemarketing must be
informed and trained in the existence and use of the OTP Firm or OTP
Holder's do-not-call list.
(3) If an OTP Firm or OTP Holder receives a request from a person
not to receive calls from that OTP Firm or OTP Holder, the OTP Firm or
OTP Holder must record the request and place the person's name, if
provided, and telephone number on its do-not-call list at the time the
request is made.\26\
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\26\ OTP Firms and OTP Holders must honor a person's do-not-call
request within a reasonable time from the date the request is made,
which may not exceed 30 days from the date of the request. If these
requests are recorded or maintained by a party other than the OTP
Firm or OTP Holder on whose behalf the outbound telephone call is
made, the OTP Firm or OTP Holder on whose behalf the outbound
telephone call is made will still be liable for any failures to
honor the do-not-call request.
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(4) OTP Firms, OTP Holders, or Associated Persons making an
outbound telephone call must make certain caller disclosures set forth
in NYSE Arca Rule 9.20(b)(4)(D).
(5) In the absence of a specific request by the person to the
contrary, a person's do-not-call request shall apply to the OTP Firm or
OTP Holder 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 call and the product being advertised.
(6) An OTP Firm or OTP Holder making outbound telephone calls must
maintain a record of a person's request not to receive further calls.
Inclusion of this requirement to adopt these procedures will not
create any new obligations on OTP Firms or OTP Holders, as they are
already subject to identical provisions under FCC telemarketing
regulations.\27\
---------------------------------------------------------------------------
\27\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
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Wireless Communications
Proposed NYSE Arca Rule 9.20(b)(5) states that the provisions set
forth in the rule are applicable to OTP Firms and OTP Holders
telemarketing or making telephone solicitations calls to wireless
telephone numbers. In addition, proposed NYSE Arca Rule 9.20(b)(5)
clarifies that the application of the rule also applies to Associated
Persons making outbound telephone calls to wireless telephone
numbers.\28\
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\28\ See also FINRA Rule 3230(e).
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Outsourcing Telemarketing
NYSE Arca Rule 9.20(b)(6) states that if an OTP Firm or OTP Holder
uses another entity to perform telemarketing services on its behalf,
the OTP Firm or OTP Holder remains responsible for ensuring compliance
with all provisions contained in the rule. Proposed NYSE Arca Rule
9.20(b)(6) also clarifies that OTP Firms and OTP Holders must consider
whether the entity or person that an OTP Firm or OTP Holder uses for
outsourcing, must be appropriately registered or licensed, where
required.\29\
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\29\ See also FINRA Rule 3230(f).
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Caller Identification Information
Proposed NYSE Arca Rule 9.20(b)(7) provides that any OTP Firm or
OTP Holder that engages in telemarketing must transmit or cause to be
transmitted the telephone number, and, when made available by the OTP
Firm or OTP Holder's telephone carrier, the name of the OTP Firm or OTP
Holder, to any caller identification service in use by a recipient of
an outbound telephone call. The telephone number so provided must
permit any person to make a do-not-call request during regular business
hours. In addition, any OTP Firm or OTP Holder that engages in
telemarketing is prohibited from blocking the transmission of caller
identification information.\30\
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\30\ Caller identification information includes the telephone
number and, when made available by the OTP Firm or OTP Holder's
telephone carrier, the name of the OTP Firm or OTP Holder.
---------------------------------------------------------------------------
These provisions are similar to the caller identification provision
in the FTC rules.\31\ Inclusion of these caller identification
provisions in this proposed rule change will not create any new
obligations on OTP Firms or OTP Holders, as they are already subject to
identical provisions under FCC telemarketing regulations.\32\
---------------------------------------------------------------------------
\31\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
\32\ See 47 CFR 64.1601(e).
---------------------------------------------------------------------------
Unencrypted Consumer Account Numbers
Proposed NYSE Arca Rule 9.20(b)(8) prohibits an OTP Firm, OTP
Holder, or Associated Person 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.\33\ The
FTC provided a discussion of the provision when it was adopted pursuant
to the Prevention Act.\34\ Additionally, the proposed rule change
defines ``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.\35\
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\33\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
\34\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4615.
\35\ See id. at 4616.
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Submission of Billing Information
The proposed rule change provides that, for any telemarketing
transaction, no OTP Firm, OTP Holder, or Associated Person may submit
billing information \36\ for payment without the express informed
consent of the customer. Proposed NYSE Arca Rule 9.20(b)(9) requires,
for any telemarketing transaction, an OTP Firm, OTP Holder, or
Associated Person 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 \37\
and a free-to-pay conversion \38\ feature, the OTP Firm, OTP Holder, or
Associated Person must:
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\36\ The term ``billing information'' means any data that
enables any person to access a customer's or donor's account, such
as a credit or debit card number, a brokerage, checking, or savings
account number, or a mortgage loan account number. See proposed NYSE
Arca Rule 9.20(b)(13)(C).
\37\ The term ``preacquired account information'' means any
information that enables an OTP Firm, OTP Holder, or Associated
Person to cause a charge to be placed against a customer's or
donor's account without obtaining the account number directly from
the customer or donor during the telemarketing transaction pursuant
to which the account will be charged. See proposed NYSE Arca Rule
9.20(b)(13)(S).
\38\ The term ``free-to-pay conversion'' means, in an offer or
agreement to sell or provide any goods or services, a provision
under which a customer receives a product or service for free for an
initial period and will incur an obligation to pay for the product
or service if he or she does not take affirmative action to cancel
before the end of that period. See proposed NYSE Arca Rule
9.20(b)(13)(M).
---------------------------------------------------------------------------
(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
[[Page 41852]]
(3) Make and maintain an audio recording of the entire
telemarketing transaction.
For any other telemarketing transaction involving preacquired
account information, the OTP Firm, OTP Holder, or Associated Person
must:
(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.\39\ The FTC
provided a discussion of the provision when it was adopted pursuant to
the Prevention Act.\40\
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\39\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
\40\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4615.
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Abandoned Calls
Proposed NYSE Arca Rule 9.20(b)(10) prohibits an OTP Firm, OTP
Holder, or Associated Person from abandoning \41\ any outbound
telemarketing call. The abandoned calls prohibition is subject to a
``safe harbor'' under proposed subparagraph (10)(B) that requires:
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\41\ An outbound telephone call is ``abandoned'' if the called
person answers it and the call is not connected to an OTP Firm, OTP
Holder, or Associated Person within two seconds of the called
person's completed greeting.
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(1) The OTP Firm, OTP Holder, or Associated Person 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 OTP Firm, OTP Holder, or Associated Person, 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 an Associated Person is not available to speak with
the person answering the telemarketing call within two seconds after
the person's completed greeting, the OTP Firm, OTP Holder, or
Associated Person promptly plays a recorded message stating the name
and telephone number of the OTP Firm, OTP Holder, or Associated Person
on whose behalf the call was placed; and
(4) The OTP Firm or OTP Holder to maintain records documenting
compliance with the ``safe harbor.''
The proposed rule change is substantially similar to the FTC's
provisions regarding abandoned calls.\42\ The FTC provided a discussion
of the provisions when they were adopted pursuant to the Prevention
Act.\43\
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\42\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
\43\ See Federal Trade Commission, Telemarketing Sales Rule, 68
FR 4580 (January 29, 2003) at 4641.
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Prerecorded Messages
Proposed NYSE Arca Rule 9.20(b)(11) prohibits an OTP Firm, OTP
Holder, or Associated Person from initiating any outbound telemarketing
call that delivers a prerecorded message without a person's express
written agreement \44\ to receive such calls. The proposed rule change
also requires that all prerecorded telemarketing calls provide
specified opt-out mechanisms so that a person can opt out of future
calls. The prohibition does not apply to a prerecorded message
permitted for compliance with the ``safe harbor'' for abandoned calls
under proposed subparagraph (10)(B).
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\44\ The express written agreement must: (a) Have been obtained
only after a clear and conspicuous disclosure that the purpose of
the agreement is to authorize the OTP Firm or OTP Holder to place
prerecorded calls to such person; (b) have been obtained without
requiring, directly or indirectly, that the agreement be executed as
a condition of purchasing any good or service; (c) evidence the
willingness of the called person to receive calls that deliver
prerecorded messages by or on behalf of the OTP Firm or OTP Holder;
and (d) include the person's telephone number and signature (which
may be obtained electronically under the E-Sign Act).
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The proposed rule change is substantially similar to the FTC's
provisions regarding prerecorded messages.\45\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\46\
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\45\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
\46\ See Federal Trade Commission, Telemarketing Sales Rule, 73
FR 51164 (August 29, 2008) at 51165.
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Credit Card Laundering
Proposed NYSE Arca Rule 9.20(b)(12) prohibits credit card
laundering, the practice of depositing into the credit card system \47\
a sales draft that is not the result of a credit card transaction
between the cardholder \48\ and the OTP Firm or OTP Holder. Except as
expressly permitted, the proposed rule change prohibits an OTP Firm,
OTP Holder, or Associated Person from:
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\47\ The term ``credit card system'' means any method or
procedure used to process credit card transactions involving credit
cards issued or licensed by the operator of that system. The term
``credit card'' means any card, plate, coupon book, or other credit
device existing for the purpose of obtaining money, property, labor,
or services on credit. The term ``credit'' means the right granted
by a creditor to a debtor to defer payment of debt or to incur debt
and defer its payment. See proposed NYSE Arca Rule 9.20(b)(13)(G),
(H), and (J).
\48\ The term ``cardholder'' means a person to whom a credit
card is issued or who is authorized to use a credit card on behalf
of or in addition to the person to whom the credit card is issued.
See proposed NYSE Arca Rule 9.20(b)(13)(F).
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(1) Presenting to or depositing into, the credit card system for
payment, a credit card sales draft \49\ generated by a telemarketing
transaction that is not the result of a telemarketing credit card
transaction between the cardholder and the OTP Firm or OTP Holder;
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\49\ The term ``credit card sales draft'' means any record or
evidence of a credit card transaction. See proposed NYSE Arca Rule
9.20(b)(13)(I).
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(2) Employing, soliciting, or otherwise causing a merchant,\50\ 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
---------------------------------------------------------------------------
\50\ The term ``merchant'' means a person who is authorized
under written contract with an acquirer to honor or accept credit
cards, or to transmit or process for payment credit card payments,
for the purchase of goods or services or a charitable contribution.
The term ``acquirer'' means a business organization, financial
institution, or an agent of a business organization or financial
institution that has authority from an organization that operates or
licenses a credit card system to authorize merchants to accept,
transmit, or process payment by credit card through the credit card
system for money, goods or services, or anything else of value. A
``charitable contribution'' means any donation or gift of money or
any other thing of value, for example a transfer to a pooled income
fund. See proposed NYSE Arca Rule 9.20(b)(13)(B) and (N).
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(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 \51\ or the
applicable credit card system.
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\51\ The term ``merchant agreement'' means a written contract
between a merchant and an acquirer to honor or accept credit cards,
or to transmit or process for payment credit card payments, for the
purchase of goods or services or charitable contribution. See
proposed NYSE Arca Rule 9.20(b)(13)(O).
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The proposed rule change is substantially similar to the FTC's
provisions regarding credit card laundering.\52\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\53\
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\52\ See 16 CFR 310.2; see also FINRA Rule 3230(l).
\53\ See Federal Trade Commission, Telemarketing Sales Rule, 60
FR 43842 (August 23, 1995) at 43852.
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Definitions
Proposed NYSE Arca Rule 9.20(b)(13) adopts the following
definitions, which are substantially similar to the FTC's definitions
of these terms: ``acquirer,''
[[Page 41853]]
``billing information,'' ``caller identification service,''
``cardholder,'' ``charitable contribution,'' ``credit,'' ``credit
card,'' ``credit card sales draft,'' ``credit card system,''
``customer,'' ``donor,'' ``established business relationship,'' ``free-
to-pay conversion,'' ``merchant,'' ``merchant agreement,'' ``outbound
telephone call,'' ``person,'' ``preacquired account information,'' and
``telemarketing''.\54\ The FTC provided a discussion of each definition
when they were adopted pursuant to the Prevention Act.
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\54\ See proposed NYSE Arca Rule 9.20(b)(13)(B), (C), (E), (F),
(G), (H), (I), (J), (K), (L), (M), (N), (O), (P), (Q), (S), and (T);
and 16 CFR 310.2(a), (c), (d), (e), (f), (h), (i), (j), (k), (l),
(n), (o), (p), (s), (t), (v), (w), (x), and (dd); see also FINRA
Rule 3230(m)(2), (3), (5), (6), (7), (8), (9), (10), (11), (12),
(13), (14), (15), (16), (17), (19), and (20). The proposed rule
change also adopts definitions of ``account activity,'' ``broker-
dealer of record,'' and ``personal relationship'' that are
substantially similar to FINRA's definitions of these terms. See
proposed NYSE Arca Rule 9.20(b)(13)(A), (D), and (R) and FINRA Rule
3230(m)(1), (4), and (18); see also 47 CFR 64.1200(t)(14) (FCC's
definition of ``personal relationship'').
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The Exchange proposes make the new rule text to NYSE Arca Rule
9.20(b) effective on the same date as FINRA makes FINRA Rule 3230
effective.\55\
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\55\ See supra note 4.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \56\ in general, and furthers the
objectives of Section 6(b)(5) \57\ 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. Specifically, the
Exchange believes that the proposed rule change supports the objectives
of the Exchange Act by providing greater harmonization between NYSE
Arca Rules and FINRA Rules of similar purpose, resulting in less
burdensome and more efficient regulatory compliance. In particular,
NYSE Arca OTP Holders that are also FINRA members are subject to both
NYSE Arca Rule 9.20(b) and FINRA Rule 3230 and harmonizing these two
rules would promote just and equitable principles of trade by requiring
a single standard for telemarketing. In addition, adopting new rule
text to NYSE Arca Rule 9.20(b) will assure that the Exchange's rules
governing telemarketing meet the standards set forth in the Prevention
Act. To the extent the Exchange has proposed changes that differ from
the FINRA version of the NYSE Arca Rules, it believes such changes are
technical in nature and do not change the substance of the proposed
NYSE Arca Rule. The Exchange also believes that the proposed rule
change will update and clarify the requirements governing
telemarketing, which will promote just and equitable principles of
trade and help to protect investors.
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\56\ 15 U.S.C. 78f(b).
\57\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 that is 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
The Exchange neither solicited nor received written comments with
respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Exchange Act \58\ and Rule 19b-4(f)(6)
thereunder.\59\ Because the proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative prior to 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, if consistent
with the protection of investors and the public interest, the proposed
rule change has become effective pursuant to Section 19(b)(3)(A) of the
Exchange Act and Rule 19b-4(f)(6)(iii) thereunder.
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\58\ 15 U.S.C. 78s(b)(3)(A)(iii).
\59\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \60\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\61\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
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\60\ 17 CFR 240.19b-4(f)(6).
\61\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Exchange Act.
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 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 email to rule-comments@sec.gov. Please include
File Number SR-NYSEARCA-2012-54 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-NYSEARCA-2012-54. 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 Section, 100 F Street
NE., Washington, DC 20549-1090 on official business days between the
hours of 10 a.m. and 3 p.m. Copies of the filing will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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.
[[Page 41854]]
All submissions should refer to File Number SR-NYSEARCA-2012-54 and
should be submitted on or before August 6, 2012.
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\62\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17173 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P
