[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32483-32487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12850]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69635; File No. SR-MSRB-2013-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Approving a Proposed Rule Change To Amend MSRB Rule G-39,
on Telemarketing
May 24, 2013.
I. Introduction
On February 11, 2013, the Municipal Securities Rulemaking Board
(``MSRB'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'' or ``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend MSRB Rule G-39, on
telemarketing. Specifically, the proposed rule change would amend
certain provisions of MSRB Rule G-39 and add new provisions to make the
rule substantially similar to the telemarketing rules of the Federal
Trade Commission (``FTC''). The proposed rule change was published for
comment in the Federal Register on March 4, 2013.\3\ The Commission
received no comments on the proposed rule change. 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. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Act Release No. 68987 (Feb. 16, 2013), 78 FR
14144 (Mar. 4, 2013) (``Notice''). The comment period closed on
March 25, 2013.
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[[Page 32484]]
II. Description of the Proposal
As stated in the Notice, the proposed rule change would amend MSRB
Rule G-39, on telemarketing, to include provisions substantially
similar to those contained in the FTC rules that prohibit deceptive and
other abusive telemarketing acts or practices.\4\ 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 (along with the other self-regulatory organizations) to enact
a telemarketing rule in accordance with the Prevention Act.\5\ The
Prevention Act requires the Commission to promulgate, or direct any
national securities exchange or registered national securities
association (collectively, ``self-regulatory organizations'' or
``SROs'') 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.\6\
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\4\ 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 8.
\5\ See Prevention Act supra note 4.
\6\ 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 the SROs, together with the other
rules of the SROs, 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.\7\ Since 1997,
the FTC has amended its telemarketing rules in light of changing
telemarketing practices and technology.\8\
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\7\ See Telemarketing and Consumer Fraud and Abuse Prevention
Act; Determination that No Additional Rulemaking Required, 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.
\8\ 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 (along with all
other SROs) 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.\9\ 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.'' \10\
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\9\ 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.
\10\ Id.
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The proposed rule amendments, as directed by the Commission staff,
would amend and adopt provisions in Rule G-39 that would be
substantially similar to the FTC's current rules that prohibit
deceptive and other abusive telemarketing acts or practices as
described below.\11\
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\11\ 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,\12\ and the rules of the
Federal Communications Commission relating to telemarketing practices
and the rights of telephone consumers.\13\
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\12\ See 47 U.S.C. 227.
\13\ 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 Rule G-
39 that a 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. This
amendment makes this provision consistent with the FTC's Telemarketing
Sales Rule because the time for which the firm-specific opt-out must be
honored under the FTC's Telemarketing Sales Rule \14\ is
indefinite.\15\ Additionally, the proposed rule change would clarify
that the record of do-not-call requests must be permanent.
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\14\ See 16 CFR 310.4.
\15\ 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
of the rule. The proposed amendments 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 \16\ 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.\17\
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\16\ 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.
\17\ 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.\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 this approach is substantially similar to the approach taken by
the FTC.\19\
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\18\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h). The
FTC provided a discussion of the provision when it was adopted
pursuant to the Prevention Act. See FTC, Telemarketing Sales Rule,
68 FR 4580, 4615-16 (Jan. 29, 2003).
\19\ See Id. at 4616.
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[[Page 32485]]
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 provisions regarding the submission of billing
information.\22\ 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, the proposed rule is substantially similar to FINRA's
telemarketing rule, which includes similar provisions.\23\
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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). The
FTC provided a discussion of the provision when it was adopted. See
FTC, Telemarketing Sales Rule, 68 FR 4580, 4616-23 (Jan. 29, 2003).
\23\ 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 \24\
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 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.\25\
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\24\ 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.
\25\ See 16 CFR 310.4(b)(1)(iv) and (b)(4); see also FINRA Rule
3230(j) (Throughout FINRA Rule 3230(j) and (k), referred to in note
30 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.). The FTC provided a discussion of the
provisions when they were adopted pursuant to the Prevention Act.
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 \26\ 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.\27\
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\26\ 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'')).
\27\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k). The
FTC provided a discussion of the provisions when they were adopted
pursuant to the Prevention Act. 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 \28\ for payment, a credit
card sales draft \29\ generated by a telemarketing transaction that is
not the result of a telemarketing credit card transaction between the
cardholder \30\ and the dealer; \31\ (2) employing, soliciting, or
otherwise causing a merchant,\32\ or an employee,
[[Page 32486]]
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 \33\ 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.\34\ 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, the proposed rule is substantially similar to
FINRA's telemarketing rule, which includes these provisions.\35\
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\28\ 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 Rule G-39(n)(vii),
G-39(n)(viii), and G-39(n)(x), respectively.
\29\ The term ``credit card sales draft'' would mean any record
or evidence of a credit card transaction. See proposed Rule G-
39(n)(ix).
\30\ 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).
\31\ 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.
\32\ 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 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).
\33\ 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).
\34\ See 16 CFR 310.3(c); see also FINRA Rule 3230(l). The FTC
provided a discussion of the provisions when they were adopted
pursuant to the Prevention Act. See FTC, Telemarketing Sales Rule,
60 FR 43842, 43852 (Aug. 23, 1995).
\35\ 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.\36\ 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.\37\
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\36\ See FINRA Rule 3230.
\37\ 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.\38\ 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 supplies.\39\
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\38\ See FTC, Telemarketing Sales Rule, 60 FR 43842, 43861 (Aug.
23, 1995).
\39\ See 16 CFR 310.6(b)(7). 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.''
See FTC, Telemarketing Sales Rule, 60 FR 43842, 43862 (Aug. 23,
1995). 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.'' Id. at 43861. 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. Id. 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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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 should 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.\40\
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\40\ 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: \41\
``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.'' \42\ Additionally, the
proposed rule change would delete the reference to ``telephone
solicitation.''
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\41\ 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.
\42\ See proposed Rule G-39(n)(ii), (iii), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xiii), (xiv), (xv), (xvi), (xix), and
(xx).
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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 but that reflect MSRB's
jurisdictional scope. 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
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
[[Page 32487]]
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
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.\43\ Second,
the proposed revisions would renumber and make 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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\43\ 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 requested an effective date for the proposed rule change
of 90 days following the date of SEC approval.
III. Summary of Comments Received
As previously noted, the Commission received no comments on the
proposed rule change.
IV. Commission's Findings
The Commission has carefully reviewed the proposed rule change,
and, based on its review of the record, finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to the MSRB.\44\ In particular, the
proposed rule change is consistent with Section 15B(b)(2)(C) of the
Act, which provides that the MSRB's rules shall 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, 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, obligated persons, and the
public interest.\45\
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\44\ In approving the proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\45\ 15 U.S.C. 78o-4(b)(2)(C).
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More specifically, the Commission finds that the proposed rule
change is consistent with Section 15B(b)(2)(C) of the Act because it
should protect investors and the public interest by preventing dealers
from engaging in fraudulent and manipulative acts and practices,
particularly deceptive and other abusive telemarketing acts or
practices. The Commission also finds that the proposed rule is
consistent with the FTC's and FINRA's telemarketing rules, which
include provisions similar to those described above. Accordingly, the
proposed rule change should foster cooperation and coordination with
FINRA members and other persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in municipal securities and municipal financial products,
and remove impediments to and perfect the mechanism of a free and open
market in municipal securities and municipal financial products.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Act and the rules and regulations
thereunder. As requested by the MSRB, the proposed rule change will
become effective 90 days following the date of SEC approval.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\46\ that the proposed rule change (SR-MSRB-2013-02) be, and hereby
is, approved.
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\46\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\47\
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\47\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2013-12850 Filed 5-29-13; 8:45 am]
BILLING CODE 8011-01-P