[Federal Register Volume 78, Number 42 (Monday, March 4, 2013)]
[Notices]
[Pages 14144-14148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04844]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68987; File No. SR-MSRB-2013-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change Relating to
Amendments to MSRB Rule G-39, on Telemarketing
February 26, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 11, 2013, the Municipal Securities Rulemaking Board
(``MSRB'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been substantially prepared by the
MSRB. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB is filing with the Commission proposed amendments to MSRB
Rule G-39, on telemarketing. The proposed rule change would adopt
provisions that are substantially similar to the telemarketing rules of
the Federal Trade Commission (``FTC'').
The text of the proposed rule change is available on the MSRB's Web
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2013-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Summary of Proposed Rule Change. The MSRB proposes to amend Rule G-
39, on telemarketing, to add provisions that are substantially similar
to FTC rules that prohibit deceptive and other abusive telemarketing
acts or practices.\3\ Rule G-39 currently requires brokers, dealers,
and municipal securities dealers (``dealers'') to, among other things,
maintain do-not-call lists and limit the hours of telephone
solicitations. In 1996, the SEC directed the MSRB to enact a
telemarketing rule in accordance with the Prevention Act.\4\ 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, unless the
Commission determines either that the rules are not necessary or
appropriate for the protection of investors or the maintenance of fair
and orderly markets, or that existing federal securities laws or
Commission rules already provide for such protection.\5\
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\3\ The FTC initially adopted its rules prohibiting deceptive
and other abusive telemarketing acts or practices (the
``Telemarketing Sales Rule,'' codified at 16 CFR 310.1-9) in 1995
under the Telemarketing and Consumer Fraud and Abuse Prevention Act
(``Prevention Act'') codified at 15 U.S.C. 6101-6108. See FTC,
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995). The
Telemarketing Sales Rule has been amended since 1995, prompting the
SEC's request for the MSRB to review its telemarketing rule. See
amendments cited infra note 7.
\4\ See Prevention Act supra note 3.
\5\ See 15 U.S.C. 6102.
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In 1997, the SEC determined that telemarketing rules promulgated
and expected to be promulgated by self-regulatory organizations,
together with the other rules of the self-regulatory organizations, the
federal securities laws, and the SEC's rules thereunder, satisfied the
requirements of the Prevention Act because, at the time, the applicable
provisions of those laws and rules were substantially similar to the
Telemarketing Sales Rule.\6\ Since 1997, the FTC has amended its
telemarketing rules in light of changing telemarketing practices and
technology.\7\
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\6\ See Telemarketing and Consumer Fraud and Abuse Prevention
Act; Determination that No Additional Rulemaking Required,
Securities Exchange Act Release No. 38480 (Apr. 7, 1997), 62 FR
18666 (Apr. 16, 1997). The Commission also determined that some
provisions of the FTC's telemarketing rules related to areas already
extensively regulated by existing securities laws or activities not
applicable to securities transactions. Id. at 62 FR 18667-69.
\7\ See, e.g., FTC, Telemarketing Sales Rule, 73 FR 51164 (Aug.
29, 2008) (amendments to the Telemarketing Sales Rule relating to
prerecorded messages and call abandonments); and FTC, Telemarketing
Sales Rule, 68 FR 4580 (Jan. 29, 2003) (amendments to the
Telemarketing Sales Rule establishing requirements for, among other
things, sellers and telemarketers to participate in the national do-
not-call registry).
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In May 2011, Commission staff directed the MSRB to conduct a review
of its telemarketing rule and propose rule amendments that provide
protections that are at least as strong as those provided by the FTC's
telemarketing rules.\8\ Commission staff had concerns ``that the [self-
regulatory organization] rules overall have not kept pace with the
FTC's rules, and thus may no longer meet the standards of the
Prevention Act.'' \9\
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\8\ See Letter from Robert W. Cook, Director, Division of
Trading and Markets, SEC, to Michael G. Bartolotta, then Chairman of
the Board of Directors of the MSRB, dated May 10, 2011 (the ``Cook
Letter''). SEC staff also asked the MSRB to coordinate with the
Financial Industry Regulatory Authority (``FINRA'') regarding
proposed telemarketing rule amendments.
\9\ Id.
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The proposed rule amendments, as directed by the Commission staff,
would amend and adopt provisions in Rule G-
[[Page 14145]]
39 that the MSRB believes would be substantially similar to the FTC's
current rules that prohibit deceptive and other abusive telemarketing
acts or practices as described below.\10\
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\10\ The MSRB believes that proposed amended Rule G-39 also
would be similar in most material respects to FINRA Rule 3230
(Telemarketing). The material differences between FINRA Rule 3230
and proposed Rule G-39 are described below.
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General Telemarketing Requirements
Proposed Rule G-39(a)(iv) would remind dealers that engage in
telemarketing that they are also subject to the requirements of
relevant state and federal laws and rules, including the Prevention
Act, the Telephone Consumer Protection Act,\11\ and the rules of the
Federal Communications Commission relating to telemarketing practices
and the rights of telephone consumers.\12\
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\11\ See 47 U.S.C. 227.
\12\ See 47 CFR 64.1200.
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Maintenance of Do-Not-Call Lists
Proposed Rule G-39(d)(vi) would maintain the requirement in MSRB
Rule G-39 that a broker, dealer, or municipal securities dealer making
telemarketing calls must maintain a record of a caller's request not to
receive further calls. The amendment, however, would delete the
requirement that a dealer honor a firm-specific do-not-call request for
five years from the time the request is made. Commission staff directed
the MSRB to delete this provision because the time for which the firm-
specific opt-out must be honored under the FTC's Telemarketing Sales
Rule \13\ is indefinite, rather than five years as currently provided
in Rule G-39.\14\ Additionally, the proposed rule change would clarify
that the record of do-not-call requests must be permanent.
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\13\ See 16 CFR 310.4.
\14\ See the Cook Letter.
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Outsourcing Telemarketing
MSRB Rule G-39(f) would continue to state that, if a dealer uses
another entity to perform telemarketing services on its behalf, the
dealer remains responsible for ensuring compliance with all provisions
contained in the rule. The proposed revisions would clarify that
dealers must consider whether the entity or person that a dealer uses
for outsourcing, is appropriately registered or licensed, where
required.
Caller Identification Information
Proposed Rule G-39(g) would provide that dealers engaging in
telemarketing must transmit caller identification information\15\ and
are explicitly prohibited from blocking caller identification
information. The telephone number provided would have to permit any
person to make a do-not-call request during regular business hours.
These provisions are similar to the caller identification provision in
the FTC rules.\16\
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\15\ Caller identification information includes the telephone
number and, when made available by the broker, dealer, or municipal
securities dealer's telephone carrier, the name of the broker,
dealer, or municipal securities dealer.
\16\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
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Unencrypted Consumer Account Numbers
Proposed Rule G-39(h) would prohibit a dealer from disclosing or
receiving, for consideration, unencrypted consumer account numbers for
use in telemarketing. The MSRB believes that this proposed provision
would be substantially similar to the FTC's provision regarding
unencrypted consumer account numbers.\17\ The FTC provided a discussion
of the provision when it was adopted pursuant to the Prevention
Act.\18\ Additionally, the proposed rule change would define
``unencrypted'' to include not only complete, visible account numbers,
whether provided in lists or singly, but also encrypted information
with a key to its decryption. The MSRB believes that the proposed
definition is substantially similar to the approach taken by the
FTC.\19\
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\17\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
\18\ See FTC, Telemarketing Sales Rule, 68 FR 4580, 4615-16
(Jan. 29, 2003).
\19\ See Id. at 4616.
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Submission of Billing Information
Proposed Rule G-39(i) would provide that, for any telemarketing
transaction, a dealer must 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
\20\ and a free-to-pay conversion \21\ feature, the dealer would have
to: (1) Obtain from the customer, at a minimum, the last four digits of
the account number to be charged; (2) obtain from the customer an
express agreement to be charged and to be charged using the identified
account number; and (3) make and maintain an audio recording of the
entire telemarketing transaction. For any other telemarketing
transaction involving preacquired account information, the dealer would
have to: (1) Identify the account to be charged with sufficient
specificity for the customer to understand what account will be
charged; and (2) obtain from the customer an express agreement to be
charged and to be charged using the identified account number. The MSRB
believes that these proposed provisions would be substantially similar
to the FTC's provision regarding the submission of billing
information.\22\ The FTC provided a discussion of the provision when it
was adopted.\23\ Although the MSRB expressed the view that some of
these provisions may not be directly applicable to securities
transactions generally, and, more specifically, municipal securities
transactions, SEC staff suggested that the MSRB substantially conform
the proposed rule to FINRA's telemarketing rule, which includes similar
provisions.\24\
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\20\ The term ``preacquired account information'' would mean any
information that enables a dealer 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 G-39(n)(xix).
\21\ The term ``free-to-pay conversion'' would mean, 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 G-39(n)(xiii).
\22\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
\23\ See FTC, Telemarketing Sales Rule, 68 FR 4580, 4616-23
(Jan. 29, 2003).
\24\ See FINRA Rule 3230(i). See also the Cook Letter.
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Abandoned Calls
Proposed Rule G-39(j) would prohibit a dealer from abandoning \25\
any outbound telephone call. The abandoned calls prohibition would be
subject to a ``safe harbor'' under proposed subparagraph (j)(ii) that
would require the dealer: (1) 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) for each outbound
telephone call placed, to allow the telephone to ring for at least 15
seconds or four rings before disconnecting an unanswered call; (3)
whenever a dealer is not available to speak with the person answering
the outbound telephone call within two seconds after the person's
completed greeting, to promptly play a recorded message stating the
name and telephone
[[Page 14146]]
number of the dealer on whose behalf the call was placed; and (4) to
maintain records establishing compliance with the ``safe harbor.'' The
MSRB believes that these proposed provisions would be substantially
similar to the FTC's provisions regarding abandoned calls.\26\ The FTC
provided a discussion of the provisions when they were adopted pursuant
to the Prevention Act.\27\
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\25\ Under the proposed amended rule, an outbound call would be
``abandoned'' if a called person answers it and the call is not
connected to a dealer within two seconds of the called person's
completed greeting.
\26\ See 16 CFR 310.4(b)(1)(iv) and (b)(4); see also FINRA Rule
3230(j) (Throughout FINRA Rules 3230(j) and (k), referred to in note
29 infra, FINRA uses the term ``telemarketing call'' where the
proposed MSRB rule would use the term ``outbound telephone call.''
The MSRB believes that its proposed terminology is substantially
similar because proposed MSRB Rule G-39(n)(xvi) defines ``outbound
telephone call'' as a telephone call initiated by a telemarketer to
induce the purchase of goods or services or to solicit a charitable
contribution from a donor).
\27\ See FTC, Telemarketing Sales Rule, 68 FR 4580, 4641 (Jan.
29, 2003).
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Prerecorded Messages
Proposed Rule G-39(k) would prohibit a broker, dealer, or municipal
securities dealer from initiating any outbound telephone call that
delivers a prerecorded message without a person's express written
agreement \28\ to receive such calls. The proposed rule change also
would require that all prerecorded outbound telephone calls provide
specified opt-out mechanisms so that a person can opt out of future
calls. The prohibition would not apply to a prerecorded message
permitted for compliance with the ``safe harbor'' for abandoned calls
under proposed subparagraph (j)(ii). The MSRB believes that the
proposed provisions would be substantially similar to the FTC's
provisions regarding prerecorded messages.\29\ The FTC provided a
discussion of the provisions when they were adopted pursuant to the
Prevention Act.\30\
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\28\ The express written agreement would have to: (a) Have been
obtained only after a clear and conspicuous disclosure that the
purpose of the agreement is to authorize the dealer 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 opening an account or 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 dealer; and
(d) include the person's telephone number and signature (which may
be obtained electronically under the Electronic Signatures in Global
and National Commerce Act, 15 U.S.C. 7001, et seq. (``E-Sign
Act'')).
\29\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
\30\ See FTC, Telemarketing Sales Rule, 73 FR 51164, 51165 (Aug.
29, 2008).
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Credit Card Laundering
Except as expressly permitted by the applicable credit card system,
proposed Rule G-39(l) would prohibit a dealer from: (1) Presenting to
or depositing into, the credit card system \31\ for payment, a credit
card sales draft \32\ generated by a telemarketing transaction that is
not the result of a telemarketing credit card transaction between the
cardholder \33\ and the dealer; \34\ (2) employing, soliciting, or
otherwise causing a merchant,\35\ 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 \36\ or the
applicable credit card system. The MSRB believes that these proposed
provisions would be substantially similar to the FTC's provisions
regarding credit card laundering.\37\ The FTC provided a discussion of
the provisions when they were adopted pursuant to the Prevention
Act.\38\ Although the MSRB expressed the view that some of these
provisions may not be directly applicable to securities transactions
generally, and, more specifically, municipal securities transactions,
SEC staff suggested that the MSRB substantially conform the proposed
rule to FINRA's telemarketing rule, which includes these
provisions.\39\
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\31\ The term ``credit card system'' would mean 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'' would mean 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'' would mean the
right granted by a creditor to a debtor to defer payment of debt or
to incur debt and defer its payment. See proposed Rules G-
39(n)(vii), (viii), and (x).
\32\ The term ``credit card sales draft'' would mean any record
or evidence of a credit card transaction. See proposed Rule G-
39(n)(ix).
\33\ The term ``cardholder'' would mean 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 G-39(n)(vi).
\34\ The Commission staff asked the MSRB to remind its
registrants that extending or arranging for the extension of credit
to purchase securities raises a number of issues under the federal
securities laws, including whether the person extending or arranging
credit needs to register as a broker-dealer.
\35\ The term ``merchant'' would mean a person who is authorized
under a 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.
See proposed Rule G-39(n)(xiv). The term ``acquirer'' would mean 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. See proposed Rule G-39(n)(ii).
A ``charitable contribution would mean ``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 G-
39(n)(iii).
\36\ The term ``merchant agreement'' would mean 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 a charitable
contribution. See proposed Rule G-39(n)(xv).
\37\ See 16 CFR 310.3(c); see also FINRA Rule 3230(l).
\38\ See FTC, Telemarketing Sales Rule, 60 FR 43842, 43852 (Aug.
23, 1995).
\39\ See FINRA Rule 3230(l). See also the Cook Letter.
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Exemption
Proposed Rule G-39(m) would exempt business-to-business calls from
most of the provisions of the amended rule. Specifically, the exemption
would provide that outbound telephone calls from a dealer to a business
entity, government, or political subdivision, agency, or
instrumentality of a government are exempt from the rule, other than
sections (a)(ii) and (d)(i) (iii), (v) and (vi). The sections of the
proposed rule that would still apply to business-to-business calls
relate to the firm-specific do-not-call list and procedures related to
(i) maintaining a do-not-call list, (ii) training personnel on the
existence and use of the do-not-call list, (iii) the recording and
honoring of do-not-call requests, (iv) application to affiliated
persons or entities, and (v) maintenance of do-not-call lists. FINRA's
telemarketing rule, Rule 3230, does not include an express exemption
for business-to-business calls.\40\ The FTC's Telemarketing Sales Rule,
however, includes an exemption from all of its provisions for telephone
calls between a telemarketer and any business, with a caveat that most
of the rule continues to apply to sellers and telemarketers of
nondurable office or cleaning supplies.\41\
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\40\ See FINRA Rule 3230.
\41\ See 16 CFR 310.6(b)(7).
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When initially adopting the exception for business-to-business
calls, the FTC indicated that it believed Congress did not intend that
every business use of the telephone be covered by the FTC's
Telemarketing Sales Rule.\42\ The only type of business-to-business
calls that are subject to the Telemarketing Sales Rule are calls to
induce the retail sale of nondurable office or cleaning
[[Page 14147]]
supplies.\43\ Sellers of these products are treated differently because
the FTC believes that the conduct prohibitions and affirmative
disclosures mandated by the Telemarketing Sales Rule ``are crucial to
protect businesses--particularly small businesses and nonprofit
organizations--from the harsh practices of some unscrupulous sellers of
these products.\44\ Additionally, the FTC's enforcement experience
against deceptive telemarketers indicated that office and cleaning
supplies had been ``by far the most significant business-to-business
problem area[.]''Sec. \45\ When adopting its Telemarketing Sales Rule
in 1995, the FTC indicated that it would consider expanding the list of
business-to-business telemarketing activities excluded from the
exemption if additional business-to-business telemarketing activities
became problems after the Telemarketing Sales Rule became
effective.\46\ To date, however, the only type of business-to-business
telemarketing activity that is excluded from the exemption is the
retail sale of nondurable office or cleaning supplies.
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\42\ See FTC, Telemarketing Sales Rule, 60 FR 43842, 43861 (Aug.
23, 1995).
\43\ See 16 CFR 310.6(b)(7).
\44\ See FTC, Telemarketing Sales Rule, 60 FR 43842, 43862 (Aug.
23, 1995).
\45\ Id. at 43861.
\46\ Id.
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The MSRB believes that exempting business-to-business calls
pertaining to municipal securities from Rule G-39 would be consistent
with the FTC's general approach to exempting business-to-business calls
because, unlike sellers of nondurable office or cleaning supplies,
dealers are subject to an entire regulatory regime, which includes the
federal securities laws, the fair practice rules of the MSRB, and
examinations and enforcement by FINRA, banking regulators and the SEC.
Nevertheless, the provisions of proposed Rule G-39 pertaining to the
firm-specific do-not-call list and related procedures would apply to
business-to-business calls. Dealers are already required to maintain a
firm-specific do-not-call list for requests that are not related to
business-to-business calls; therefore, the MSRB believes that requiring
such a list with respect to business-to-business calls would not create
an undue burden. Moreover, the MSRB believes that it would be
reasonable to require dealers to honor the wishes of businesses that do
not wish to be solicited by telephone by requiring dealers to maintain
a list of such do-not-call requests. The MSRB believes that this
approach also would be consistent with FINRA's telemarketing rule and
related guidance.\47\
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\47\ See FINRA Rule 3230; see also FINRA guidance dated November
1, 1995, Requirements of member firms in maintaining do-not-call
lists under NASD Rule 3110 (``[M]embers who are involved in
telemarketing, and whom make cold calls to the public, [must] * * *
establish and maintain a do-not-call list notwithstanding whether
[the member] contact[s] businesses or residences'').
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Definitions
Proposed Rule G-39(n) would include the following definitions,
which the MSRB believes would be substantially similar to the
corresponding definitions in the FTC's Telemarketing Sales Rule: \48\
``acquirer,'' ``billing information,'' ``caller identification
service,'' ``cardholder,'' ``charitable contribution,'' ``credit,''
``credit card,'' ``credit card sales draft,'' ``credit card system,''
``customer,'' ``donor,'' ``free-to-pay conversion,'' ``merchant,''
``merchant agreement,'' ``outbound telephone call,'' ``preacquired
account information'' and ``telemarketer.'' \49\ Additionally, the
proposed rule change would delete the reference to ``telephone
solicitation.'' The FTC provided a discussion of each of these
definitions when it adopted them pursuant to the Prevention Act.\50\
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\48\ The MSRB believes that these definitions are also
substantially similar to definitions in FINRA Rule 3230, with the
exception of ``telemarketer,'' which is not defined in FINRA's rule.
\49\ See proposed Rule G-39(n)(ii), (iii), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xiii), (xiv), (xv), (xvi), (xix), and
(xx).
\50\ See FTC, Telemarketing Sales Rule, 60 FR 43842, 43843 (Aug.
23, 1995) and FTC, Telemarketing Sales Rule, 68 FR 4580, 4587 (Jan.
29, 2003).
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Proposed Rule G-39(n) also would include definitions of ``person''
and ``telemarketing'' that differ substantively from the FTC's and
FINRA's definitions of these terms. While the definition of ``person''
in proposed MSRB Rule G-39(n)(xvii) tracks the definition in the FTC
and FINRA rules to include any individual, group, unincorporated
association, limited or general partnership, corporation, or other
business entity, it further defines a ``person'' to include a
government, or political subdivision, agency, or instrumentality of a
government. These entities are included in the proposed definition
because dealers often solicit these types of entities. While the MSRB
believes that the proposed definition of ``telemarketing'' would be
substantially similar to the definitions in the FTC and FINRA rules,
its scope would be limited in MSRB Rule G-39(n)(xxi) to calls
``pertaining to municipal securities or municipal financial products''
since the MSRB only promulgates rules pertaining to the municipal
securities activities of dealers. The MSRB intends the limitation in
the definition to correspond with the limits of the MSRB's rulemaking
authority. As described earlier, the MSRB has implemented rules to
address sales practices by dealers that cover their municipal
securities activities, including sales by telephone.
Technical and Conforming Changes
The proposed revisions to MSRB Rule G-39 would make a number of
minor technical and conforming changes. First, the proposed revisions
would amend Rule G-39 to delete the phrase ``or person associated with
a broker, dealer or municipal securities dealer'' throughout the rule
since associated persons are included in the definition of ``broker,
dealer or municipal securities dealer'' in the MSRB rules.\51\ Second,
the proposed revisions would renumber and make minor technical changes
to the terms ``account activity,'' ``broker, dealer or municipal
securities dealer of record,'' ``established business relationship,''
and ``personal relationship.'' Third, the proposed revisions would
amend paragraphs (a), (b), (c), (c)(iv), and (e) by replacing the term
``telephone solicitation'' with the term ``outbound telephone call.''
Fourth, the proposed revisions would amend paragraphs (d)(iii),
(d)(iv), and (d)(vi) by replacing the term ``telemarketing'' with the
term ``outbound telephone.'' Fifth, the proposed revisions would update
a reference to an ``established business relationship'' in subparagraph
(a)(1)(A). Finally, the proposed rule change would amend paragraph
(b)(ii) to clarify that a signed, written agreement may be obtained
electronically under the E-Sign Act.
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\51\ See MSRB Rule D-11 which states: ``Unless the context
otherwise requires or a rule of the Board otherwise specifically
provides, the terms `broker,' `dealer,' * * * `municipal securities
dealer,' * * * shall refer to and include their respective
associated persons.''
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The MSRB requests an effective date for the proposed rule change of
90 days following the date of SEC approval.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\52\ which provides that the MSRB's
rules shall
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\52\ 15 U.S.C. 78o-4(b)(2)(C).
be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities and
municipal financial products,
[[Page 14148]]
to remove impediments to and perfect the mechanism of a free and
open market in municipal securities and municipal financial
products, and, in general, to protect investors, municipal entities,
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obligated persons, and the public interest.
The MSRB believes that the proposed rule change is consistent with
the Act because the proposed rule change would prevent fraudulent and
manipulative acts and protect investors and the public interest by
continuing to prohibit dealers from engaging in deceptive and other
abusive telemarketing acts or practices.
B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As discussed
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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days of such
date (i) as the Commission may designate if it finds such longer period
to be appropriate and publishes its reasons for so finding or (ii) as
to which the self-regulatory organization consents, the Commission
will:
(A) By order approve or disapprove such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MSRB-2013-02 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.
All submissions should refer to File Number SR-MSRB-2013-02. 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 Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the MSRB. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MSRB-2013-02 and should be
submitted on or before March 25, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
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\53\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04844 Filed 3-1-13; 8:45 am]
BILLING CODE 8011-01-P