[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41824-41829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17171]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67371; File No. SR-NYSEMKT-2012-04]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Deleting NYSE MKT LLC
Rule 428(a), Which Addresses Telephone Solicitation, and Amending NYSE
MKT LLC Rule 429, Which Addresses Telemarketing, To Adopt New Rule Text
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 MKT LLC (the ``Exchange''
or ``NYSE MKT'') 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delete Rule 428(a), which addresses
telephone solicitation, and amend Rule 429, which addresses
telemarketing, to 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 Rule 428(a), which addresses
telephone solicitation, and amend Rule 429, which addresses
telemarketing, to adopt new rule text that is substantially similar to
FINRA Rule 3230.\4\
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\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.
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Proposed Rule Change
The Exchange proposes to delete Rule 428(a), amend Rule 429, and
adopt new rule text to Rule 429 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.
NASD Rule 2212 and Rules 428 and 429 are similar rules that require
members, among other things, 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\
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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'')
[[Page 41825]]
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 Rule 429, 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) (Order Approving File No. SR-
NASD-2003-131).
\9\ See Securities Exchange Act Release No. 52844 (December 5,
2005), 70 FR 72477 (November 28, 2005) (Order Approving File No. SR-
Amex-2005-064).
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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\ 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\
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\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).
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The proposed rule change, as directed by the Commission staff,
adopts provisions in proposed Rule 429 that are substantially similar
to the FTC's current rules that prohibit deceptive and other abusive
telemarketing acts or practices as described below.\12\
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\12\ The text of proposed Rule 429 would be the same as FINRA
Rule 3230, except that the Exchange would substitute the term
``member organization'' for ``member.''
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Telemarketing Requirements
Proposed Rule 429(a) provides that no member organization or person
associated with a member organization 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 Rule 429(m)(11), (14), (16), (17), and
(20); 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 member
organization has an established business relationship \14\ with the
person pursuant to paragraph 3230(m)(12)(A), the member organization
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 a member organization and a person if (i) the person has
made a financial transaction or has a security position, a money
balance, or account activity with the member organization or at a
clearing firm that provides clearing services to the member
organization within the 18 months immediately preceding the date of
an outbound telephone call; (b) the member organization 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 member organization to inquire
about a product or service offered by the member organization within
the three months immediately preceding the date of an outbound
telephone call. A person's established business relationship with a
member organization does not extend to the member organization's
affiliated entities unless the person would reasonably expect them
to be included. Similarly, a person's established business
relationship with a member organization's affiliate does not extend
to the member organization unless the person would reasonably expect
the member organization 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 member organization. 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 Rule 429(m)(1), (4), and
(12); 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
member organization;\15\ or
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\15\ This restriction was previously included under Rule 429(a).
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 Rule 429(b) provides that a member organization 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 member organization 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
member organization even if the person continues to do business with
the member organization.
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(2) The member organization 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 member
organization which states that the person agrees to be contacted by
the member organization 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 Rule 429(m)(18); see also FINRA Rule 3230(m)(18).
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The proposed rule change modifies the established business
relationship exception in Rule 429 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
[[Page 41826]]
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 note14; see also FINRA Rule 3230(a).
\22\ See 16 CFR 3l0.4(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 Rule 429(c) provides that a member organization or person
associated with a member organization 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 member organization or person
associated with a member organization demonstrates that the violation
is the result of an error and that as part of the member organization's
routine business practice, it meets the following standards:
(1) The member organization has established and implemented written
procedures to comply with the national do-not-call rules;
(2) The member organization has trained its personnel, and any
entity assisting in its compliance, in procedures established pursuant
to the national do-not-call rules;
(3) The member organization has maintained and recorded a list of
telephone numbers that it may not contact; and
(4) The member organization 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 Rule 429(d) adopts procedures that member organizations
must institute to comply with Rule 429(a) prior to engaging in
telemarketing. These procedures are substantially similar to the
procedural requirements under Rule 429(d); however, the proposed rule
change deletes the requirement that a member organization 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) Member organizations 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 member
organization's do-not-call list.
(3) If a member organization receives a request from a person not
to receive calls from that member organization, the member organization
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\ Member organizations 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 member
organization on whose behalf the outbound telephone call is made,
the member organization 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) Member organizations or persons associated with a member
organization making an outbound telephone call must make certain caller
disclosures set forth in Rule 429(d)(4).
(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 member
organization 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) A member organization 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 member organizations, as they are already
subject to identical provisions under FCC telemarketing
regulations.\27\
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\27\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
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Wireless Communications
Proposed Rule 429(e) states that the provisions set forth in the
rule are applicable to member organizations telemarketing or making
telephone solicitations calls to wireless telephone numbers. In
addition, proposed Rule 429(e) clarifies that the application of the
rule also applies to persons associated with a member organization
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
Rule 429(f) states that if a member organization uses another
entity to perform telemarketing services on its behalf, the member
organization remains responsible for ensuring compliance with all
provisions contained in the rule. Proposed Rule 429(f) also clarifies
that member organizations must consider whether the entity or person
that a member organization 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 Rule 429(g) provides that any member organization that
engages in telemarketing must transmit or cause to be transmitted the
telephone number, and, when made available by the member organization's
telephone carrier, the name of the member organization, 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
member organization 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 member organization's
telephone carrier, the name of the member organization.
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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 member organizations, as they are already subject to
identical provisions under FCC telemarketing regulations.\32\
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\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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Unencrypted Consumer Account Numbers
Proposed Rule 429(h) prohibits a member organization or person
associated with a member organization from disclosing or receiving, for
consideration, unencrypted consumer account numbers for use in
telemarketing. The proposed rule
[[Page 41827]]
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 member organization or person associated with a member
organization may submit billing information \36\ for payment without
the express informed consent of the customer. Proposed Rule 429(i)
requires, for any telemarketing transaction, a member organization or
person associated with a member organization 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 member organization or person associated with a member
organization 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 Rule
429(m)(3).
\37\ The term ``preacquired account information'' means any
information that enables a member organization or person associated
with a member organization 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 Rule 429(m)(19).
\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 Rule 429(m)(13).
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(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 organization or person associated with
a member organization 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 Rule 429(j) prohibits a member organization or person
associated with a member organization from abandoning \41\ any outbound
telemarketing call. The abandoned calls prohibition is subject to a
``safe harbor'' under proposed subparagraph (j)(2) 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 a member
organization or person associated with a member organization within
two seconds of the called person's completed greeting.
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(1) The member organization or person associated with a member
organization 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 organization or person associated with a member
organization, 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 organization is not
available to speak with the person answering the telemarketing call
within two seconds after the person's completed greeting, the member
organization or person associated with a member organization promptly
plays a recorded message stating the name and telephone number of the
member organization or person associated with a member organization on
whose behalf the call was placed; and
(4) The member organization 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 Rule 429(k) prohibits a member organization or person
associated with a member organization 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 (j)(2).
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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 member organization 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 member organization; 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 Rule 429(l) 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
[[Page 41828]]
cardholder \48\ and the member organization. Except as expressly
permitted, the proposed rule change prohibits a member organization or
person associated with a member organization 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 Rule 429(m)(7), (8), and (10).
\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 Rule 429(m)(6).
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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 member organization;
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\49\ The term ``credit card sales draft'' means any record or
evidence of a credit card transaction. See proposed Rule 429(m)(9).
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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
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\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 Rule 429(m)(2) and (14).
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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 Rule 429(m)(15).
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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 Rule 429(m) adopts the following definitions, which are
substantially similar to the FTC's definitions of these terms:
``acquirer,'' ``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 Rule 429(m)(2), (3), (5), (6), (7), (8), (9),
(10), (11), (12), (13), (14), (15), (16), (17), (19), and (20); 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 Rule
429(m)(1), (4), and (18) 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 to make the new rule text to Rule 429
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 Rules
and FINRA Rules of similar purpose, resulting in less burdensome and
more efficient regulatory compliance. In particular, NYSE MKT member
organizations that are also FINRA members are subject to Rules 428 and
429 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 Rule 429 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 Rules,
it believes such changes are technical in nature and do not change the
substance of the proposed Rules. 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).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition 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
[[Page 41829]]
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEMKT-2012-04 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-NYSEMKT-2012-04. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for 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.
All submissions should refer to File Number SR-NYSEMKT-2012-04 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\
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\62\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17171 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P