SEC Adopts New Regulations for Telephone Solicitations


The SEC has adopted new rules with regard to telemarketing activity.


The Securities and Exchange Commission has adopted new rules with regard to telemarketing activity.  76 Fed. Reg. 67787 (November 2, 2011).  The comment period on these rules is closed and this article will summarize the new restrictions applicable to all entities regulated by the SEC, e.g., securities exchanges, securities brokers and dealers, investment advisors, and mutual funds.

The new rule, Financial Industry Regulatory Authority, Inc. (FINRA) 3230, replaces NYSE Rule 440A.  The full text of the new rule is available at the FINRA website. The old rule is available at the SEC website.

The changes are intended to be substantially similar to the Telemarketing Sales Rule as administered by the FTC.  76 Fed. Reg. 67787 (November 2, 2011).  The new rules require:

  • A curfew applicable to cold calls, limiting solicitation to the hours of 8:00 a.m. and 9:00 p.m. at the called party’s location.  Calls to established customers or with the prior express consent of the recipient are exempt.
  • Maintaining an internal “do-not-call” list and honoring the national “do-not-call” list.  The safe harbor specifically applies to national “do-not-call” list violations if the entity has implemented written procedures to comply with the list, trained its personnel, recorded an internal “do-not-call” list, accessed the national “do-not-call” list and it has been more than 31 days prior to the date of the call. 
  • Providing consumers a written “do-not-call” policy upon request.
  • In the absence of a specific request, a consumer’s “do-not-call” request does not apply to affiliated entities with the caller unless the consumer would reasonably expect them to be included.
  • If the company outsources telemarketing, it is responsible for ensuring compliance with all provisions of the Telemarketing Sales Rule ban on use of unencrypted consumer account numbers for use in telemarketing.  TSR free-to-pay restrictions apply.
  • Prerecorded calls are only allowed pursuant to express agreement.  In comparison to the earlier rule, this version specifically contemplates electronic signatures supporting express consent from consumers, significantly narrows permissible uses for prerecorded messages (consistent with similar amendments to the Telemarketing Sales Rule) and allows calls to wireless numbers (if otherwise compliant with applicable law).

I would be happy to answer questions regarding the above or other provisions of this new rule. You can contact me by phone (816-472-9000) or use our Contact form.