Brokers making cold calls could soon face more than angry voices and dial tones.
Beginning in September, companies that engage in phone solicitation will be required to use federally maintained do-not-call lists, with transgressors subject to fines ranging to $11,000 per violation.
The requirement is the result of a Federal Trade Commission amendment to its telemarketing sales rules. Brokerages currently reside outside the FTC's purview, but industry observers fully expect the Federal Communications Commission (which regulates brokers for these purposes) to adopt its own version of the FTC plan.
“The FCC is in the process of coming out with rules saying they will exercise jurisdiction in those areas,” says Jim Conway, a vice president with the Direct Marketing Association in New York.
Under the new FTC rules, companies must reconcile their phone contact lists with the federal do-not-call database once per quarter.
“The odds are high that brokerages will have to adhere” to a set of rules similar to the FTC's, says Keith Fotta, CEO of Gryphon Networks of Norwood, Mass., which specializes in providing do-not-call compliance solutions.
Under current NASD regulations, brokerage firms are required to maintain internal do-not-call lists. Morgan Stanley, for instance, updates its lists daily and makes the changes available through brokers' workstations.
Firms will adapt their current systems to accommodate the new registry, say spokespersons for Morgan Stanley and Merrill Lynch.
If there's good news in this for brokerage companies, it's that the rapid growth of do-not-call legislation on the state level has given firms a running start on the national registry. But this fact comes as little consolation to those most affected by the rule: the average broker.
“We'll have to find some other way of meeting the people we want to meet,” says one Merrill Lynch producer.
