Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules and Regulations 32323

1 15 U.S.C. 6101–08.

2Citations to the CEA in this notice refer to the

Commodity Exchange Act, codified at 7 U.S.C. 1 et

seq. (1994).

3Citations to ‘‘Commission Regulations’’ or

‘‘CFTC Regulations’’ refer to the CFTC’s regulations,

codified at 17 CFR 1.1. et seq.

4Section 17 of the CEA, 7 U.S.C. 21, requires the

CFTC to review and approve the rules of registered

futures associations, which have explicit selfregulatory obligations under the CEA and

Commission Regulations. To date, NFA, which

began operations in 1982, is the only registered

futures association.

5 60 FR 43842 (August 23, 1995).

6H.R. Rep. No. 20, 103d Cong., 1st Sess. at 1

(1993).

7See Section 6(f) of the CEA, 7 U.S.C. 9b. The

Telemarketing Act similarly requires the Securities

and Exchange Commission (‘‘SEC’’) to promulgate

telemarketing rules within the same time frame

unless it determines: (1) that federal securities laws

or SEC rules provide substantially similar

protection; or (2) that SEC telemarketing rules

would not be necessary or appropriate in the public

interest, or would be inconsistent with the

maintenance of fair and orderly markets. See

Section 3(d) of the Telemarketing Act, 15 U.S.C.

6102(d).

The Rule

This amendment to Part 71 of the

Federal Aviation Regulations (14 CFR

part 71) establishes Class E airspace at

Dawson, GA, to accommodate a VOR/

DME RWY 31 SIAP and for IFR

operations at Dawson Municipal

Airport. The operating status of the

airport will be changed from VRF to

include IFR operations concurrent with

publication of this SIAP.

The FAA has determined that this

regulation only involves an established

body of technical regulations for which

frequent and routine amendments are

necessary to keep them operationally

current. It, therefore, (1) is not a

‘‘significant regulatory action’’ under

Executive Order 12866; (2) is not a

‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

does not warrant preparation of a

regulatory evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that will only affect air

traffic procedures and air navigation, it

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR Part 71 as follows:

PART 71—[AMENDED]

1. The authority citation for 14 CFR

Part 71 continues to read as follows:

Authority: 49 U.S.C. 106(g); 40103, 40113,

40120; EO 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389; 14 CFR 11.69.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of Federal Aviation

Administration Order 7400.9C, Airspace

Designations and Reporting Points,

dated August 17, 1995, and effective

September 16, 1995, is amended as

follows:

Paragraph 6005 Class E airspace areas

extending upward from 700 feet above the

surface of the earth.

* * * * *

ASO GA E5 Dawson, GA [New]

Dawson Municipal Airport, GA

(Lat. 31°44’46’’N, long. 84°25’30’’W)

That airspace extending upward from 700

feet above the surface within a 6.3-mile

radius of Dawson Municipal Airport.

* * * * *

Issued in College Park, Georgia, on June 5,

1996.

Benny L. McGlamery,

Acting Manager, Air Traffic Division,

Southern Region.

[FR Doc. 96–15983 Filed 6–21–96; 8:45 am]

BILLING CODE 4910–13–M

COMMODITY FUTURES TRADING

COMMISSION

16 CFR Chapter I

Determination Concerning

Telemarketing Rules

AGENCY: Commodity Futures Trading

Commission.

ACTION: Notice of determination that

existing Commodity Exchange Act

provisions, Commission Regulations,

and National Futures Association

(‘‘NFA’’) rules provide protection from

abusive and deceptive telemarketing

practices ‘‘substantially similar’’ to that

provided by the Federal Trade

Commission’s recently promulgated

telemarketing rule.

SUMMARY: Pursuant to its obligations

under section 3(e) of the Telemarketing

and Consumer Fraud and Abuse

Prevention Act (‘‘Telemarketing Act’’),1

15 U.S.C. 6102(e), and corresponding

section 6(f) of the Commodity Exchange

Act (‘‘CEA’’),2 7 U.S.C. 9b, the

Commodity Futures Trading

Commission (‘‘Commission’’ or

‘‘CFTC’’) hereby provides notice of its

determination that existing CEA

provisions, Commission Regulations

under the CEA,3 and CFTC-approved

NFA rules,4 interpretations, and other

requirements in the area of

telemarketing, provide protection from

deceptive and abusive telemarketing

practices ‘‘substantially similar’’ to that

provided by the Federal Trade

Commission’s (‘‘FTC’s’’) recently

promulgated Telemarketing Sales Rule,

16 CFR Part 310 (Prohibition of

Deceptive and Abusive Telemarketing

Acts).5 Accordingly, the CFTC will not

promulgate additional rules under the

Telemarketing Act at this time.

Background information and a

discussion of the basis for the CFTC’s

determination that existing provisions

of its regulations and enabling statute,

together with NFA telemarketing

requirements, provide protection against

deceptive and abusive telemarketing

acts and practices substantially similar

to that provided by the FTC’s rule are

set forth below.

EFFECTIVE DATE: June 24, 1996.

FOR FURTHER INFORMATION CONTACT:

Nancy L. Walsh, Attorney, Division of

Enforcement, Commodity Futures

Trading Commission, Three Lafayette

Centre, 1155 21st Street, NW,

Washington, D.C. 20581. Telephone:

(202) 418–5330.

SUPPLEMENTARY INFORMATION:

I. The Telemarketing Act

The Telemarketing Act, signed into

law on August 16, 1994, ‘‘to strengthen

the authority of the Federal Trade

Commission to protect consumers in

connection with sales made with a

telephone, and for other purposes,’’ 6

required that the FTC adopt rules

prohibiting deceptive and abusive

telemarketing practices. As discussed

below, the Telemarketing Act also

added a new Section 6(f) to the CEA, 7

U.S.C. 9b, which requires, subject to

certain exceptions, that the CFTC

‘‘promulgate, or require each registered

futures association to promulgate, rules

substantially similar’’ to the FTC’s

telemarketing rules within six months of

the effective date of the FTC rules.7

A. Congressional Findings

In imposing rulemaking and other

obligations on the FTC, the CFTC, and

the SEC, the Telemarketing Act lists the

following Congressional findings: (1)

That telemarketing differs from other

sales activities given sellers’ mobility

and ability to make sales across state

lines without direct contact with

consumers; (2) that interstate

telemarketing fraud is a problem of such

magnitude that FTC resources are
32324 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules and Regulations

8See Section 2 of the Telemarketing Act, 15

U.S.C. 6101.

9See Section 2(5) of the Telemarketing Act, 15

U.S.C. 6101(5).

10See Sections 3(a)–(c) of the Telemarketing Act,

15 U.S.C. 6102(a)–(c).

11The statute was enacted on August 16, 1994,

and, as noted above, see supra n. 5, the FTC issued

its final Telemarketing Sales Rule on August 23,

1995.

12See Section 3(e)(1) of Telemarketing Act, 15

U.S.C. 6102(e)(1), and section 6(f)(1) of Commodity

Exchange Act, 7 U.S.C. 9b(1). See also 60 FR at

43843, n. 18 (FTC statement of basis and purpose

for final FTC telemarketing rule confirming that

such persons—as well as certain securities

professionals regulated by the SEC—are excluded

from coverage of the FTC’s rule).

13The FTC’s Telemarketing Sales Rule became

effective December 31, 1995. 60 FR 43842.

Accordingly, the CFTC, by June 30, 1996, must

promulgate rules or publish a notice of its

determination that one of the listed exceptions

applies.

14Section 6(f)(1) of the CEA, 7 U.S.C. 9b(1). These

persons (as well as certain securities professionals)

are specifically excluded from coverage by the

FTC’s telemarketing rule. See supra n. 12.

15The CFTC has properly considered NFA rules

and other requirements, as well as CFTC

Regulations and provisions of the CEA, in analyzing

whether this exception applies. Because the

Telemarketing Act requires either the CFTC or ‘‘a

registered futures association’’ to promulgate rules,

see section 6(f)(1) of the CEA, 7 U.S.C. 9b(1),

consideration of CFTC-approved NFA rules is

necessary to evaluate whether existing protection is

‘‘substantially similar’’ to that provided by the

FTC’s rule. NFA, as noted above, is the only

registered futures association. See supra n. 4. In

addition, Commission Regulation 170.15 and NFA

By-Law 1101 essentially work to require that all

commodity professionals who deal with customers

be members of NFA, thus assuring that NFA rules

apply to the listed categories of professionals,

except for floor traders and floor brokers who are

exchange members and generally not engaged in

telemarketing.

16 60 FR 43842 (August 23, 1995).

insufficient to protect consumers; (3)

that telemarketing fraud results in

approximately $40 billion/year in

losses; and (4) that consumers are

victims of other forms of telemarketing

deception and abuse as well.8

Consequently, Congress found that it

should enact legislation to offer

customers necessary protection from

telemarketing deception and abuse.9

B. Rulemaking Obligations

1. Imposed on the FTC10

The Telemarketing Act required the

FTC, within 365 days of the statute’s

enactment, to ‘‘prescribe rules

prohibiting deceptive telemarketing acts

or practices and other abusive

telemarketing acts or practices.’’ 11

Those rules, the statute provides, must

define deceptive telemarketing acts or

practices and must include: a

prohibition of any pattern of unsolicited

telephone calls; restrictions on calling

times for unsolicited calls; and a

requirement that telemarketers

‘‘promptly and clearly’’ disclose the

purpose of calls and make other

appropriate disclosures. Under the

Telemarketing Act, telemarketing rules

promulgated by the FTC shall not apply

to any person ‘‘registered or exempt

from registration’’ under the CEA as a

futures commission merchant (‘‘FCM’’),

introducing broker (‘‘IB’’), commodity

trading advisor (‘‘CTA’’), commodity

pool operator (‘‘CPO’’), leverage

transaction merchant, floor broker, or

floor trader, or any person associated

with such firms, entities or persons.12

2. Imposed on the CFTC

As noted above, the Telemarketing

Act requires the CFTC to promulgate, or

require each registered futures

association to promulgate, rules

‘‘substantially similar’’ to those of the

FTC, within six months of the effective

date of the FTC’s rules, absent certain

exceptions discussed below.13 Any

CFTC telemarketing rules promulgated

would apply to any person registered or

exempt from registration under the CEA

in connection with such person’s

business as an FCM, IB, CTA, CPO,

leverage transaction merchant, floor

broker, or floor trader, and to any person

associated with such firms, entities, or

persons.14

The CFTC, however, is not required to

promulgate rules if it determines either:

(1) That CFTC rules provide

‘‘substantially similar’’ protection from

deceptive and abusive telemarketing

practices by certain persons registered

or exempt from registration under the

CEA as the FTC’s telemarketing rule;15

or (2) that CFTC telemarketing rules are

not necessary or appropriate in the

public interest, or for the protection of

customers in the futures and options

markets, or would be inconsistent with

‘‘the maintenance of fair and orderly

markets.’’ If the CFTC determines that

one of these exceptions applies, it must

publish the reasons for its determination

in the Federal Register.

II. The FTC’s Final Rule

The FTC’s Telemarketing Sales Rule,

16 CFR Part 310, became effective

December 31, 1995.16 Most of the

substantive provisions of the rule

appear in sections 310.3 and 310.4.

Section 310.3 makes it a deceptive

telemarketing act or practice and a

violation of the FTC’s rule for

telemarketers or sellers to engage in

certain prohibited deceptive acts or

practices, including, in particular,

failing to disclose or misrepresenting

specified material information. Section

310.4 identifies certain ‘‘abusive’’

conduct (for example, engaging in

threats or using profane language),

establishes ‘‘pattern of call’’ and calling

time restrictions, and requires sellers

and telemarketers to make specific oral

disclosures (including the identity of

the seller, the purpose of the call, the

nature of the goods or services being

sold, and, if a prize promotion is

offered, that no purchase or payment is

necessary to participate in the

promotion).

III. CFTC’s Existing Protection Against

Deceptive and Abusive Telemarketing

Acts and Practices Is ‘‘Substantially

Similar’’ to Protection Under the FTC

Rule

A. Generally

As stated above, the CFTC has

determined that existing statutory

provisions, regulations, and NFA rules

governing telemarketing practices of

registered commodity professionals

provide protection from deceptive and

abusive telemarketing that is

‘‘substantially similar’’ to the protection

provided by the FTC’s Telemarketing

Sales Rule. To reach that determination,

the CFTC carefully analyzed and

compared the FTC’s Telemarketing

Sales Rule and analogous provisions of

the CEA, Commission Regulations, and

NFA rules. The Commission also

considered information from NFA on

the scope and application of its

telemarketing and sales practice rules.

Given the substantially similar

protection provided by existing CEA

provisions, Commission Regulations,

and NFA rules, and the fact that the

FTC’s rule addresses some areas not

within the Commission’s jurisdiction,

the Commission has determined,

pursuant to Section 6(f)(2) of the CEA,

7 U.S.C. 9b(2), not to promulgate

additional telemarketing rules at this

time.

Since it began operations in 1975, the

CFTC has attacked fraudulent

telemarketing schemes within its

jurisdiction consistently and vigorously,

and with considerable success. In doing

so, the CFTC brings federal court

injunctive actions and administrative

actions; it assists the United States’

Attorneys in criminal prosecutions; and

it files joint actions with states.

While, as reflected by the chart below,

certain CEA provisions, Commission

Regulations, and NFA rules address and

prohibit the same acts and practices

targeted by the FTC’s Telemarketing

Sales Rule, those provisions are part of

a comprehensive regulatory scheme

developed specifically for the futures

and commodity options markets. The

FTC’s Telemarketing Rule, on the other

hand, defines the terms, ‘‘telemarketer’’

and ‘‘goods or services’’ broadly without
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules and Regulations 32325

17Section 310.2(t) of the FTC’s Telemarketing

Sales Rule, for example, defines ‘‘telemarketer’’ as

‘‘any person who, in connection with telemarketing,

initiates or receives telephone calls to or from a

customer.’’ The FTC similarly defines the phrase,

‘‘goods or services’’ broadly to cover ‘‘any tangible

and intangible goods or services including, but not

limited to, leases, licenses, or memberships,’’ as

well as prizes and awards. See Statement of Basis

and Purpose, 60 FR at 43844.

18Provisions of the FTC’s rule are listed and

described on the left, and analogous provisions of

the CEA, Commission Regulations or NFA rules are

listed and described on the right.

regard to the subject matter of particular

solicitations.17 In light of the agencies’

different regulatory missions, the FTC’s

Telemarketing Sales Rule addresses the

telemarketing of certain goods and

services that are not within the CFTC’s

jurisdiction or expertise, such as prize

promotions and awards. Accordingly,

not every provision of the FTC’s

Telemarketing Sales Rule has a

precisely equivalent analogue in the

CEA, Commission Regulations, or NFA

Rules.

B. Comparison Chart: FTC

Telemarketing Sales Rule and Existing

CEA Provisions, Commission

Regulations, and NFA Rules

The following chart provides a sideby-side description and comparison of

substantive provisions of the FTC’s

Telemarketing Sales Rule and certain

analogous provisions of the CEA,

Commission Regulations, and NFA

rules.18 Given the CFTC’s and the FTC’s

different regulatory missions and the

fact that the FTC’s rule addresses certain

subjects and products outside the

CFTC’s jurisdiction, not every subject

addressed by the FTC’s Telemarketing

Sales Rule is governed or addressed by

a corresponding provision of the CEA,

Commission Regulations, or NFA Rules.

The chart is intended to provide an

overview and concise summary of the

FTC’s rule and relevant provisions of

the CEA, Commission Regulations, and

NFA Rules. The chart is not intended to

be an exhaustive list of every CEA

provision, Commission rule, and NFA

rule or requirement relating to each

provision of the FTC’s rule.

SECTION 310.3: DECEPTIVE TELEMARKETING ACTS OR PRACTICES

(a): Prohibited Deceptive Acts/

Practices. It is a deceptive act or

practice to:

Antifraud provisions of the CEA and Commission Regulations require disclosure of material information.

(1) Fail to disclose the following

‘‘material information’’ in clear

and conspicuous manner before

customer pays: total costs; all

material limits, restrictions, conditions to purchasing, receiving

or using goods or services; any

refund, cancellation, exchange

policy; (for prize promotion)

odds of receiving prize; and all

material costs/conditions to redeeming prize;.

Reg. 1.55 requires FCMs and IBs, before opening accounts, to furnish customers with standard written

risk disclosure statement disclosing the substantial risk of loss from trading commodity futures contracts and secure signed acknowledgement. See Reg. 30.6 (disclosure requirements for FCMs and IBs

opening foreign futures or option account); Part 4 of Regs. (CPOs and CTAs, before soliciting, accepting, or receiving funds, must furnish disclosure document and risk disclosure statement, disclosing, among other things, break-even point, the pool or trading advisor’s business background,

principal risk factors, fees and expenses, and performance information); Reg. 4.21 et seq. (for CPOs);

Reg. 4.31 et seq. (for CTAs). Reg. 32.5 requires options disclosure statement, including description of

transaction, costs, effect of foreign currency fluctuations, and disclosure of volatile nature of commodities markets, risk of loss, and other information. Reg. 31.11 (leverage transaction merchants

must furnish disclosure document and secure signed acknowledgement).

(2) Misrepresent, directly or by

implication, listed material information.

CEA, 4b(a)(i), 7 U.S.C. 6b(a)(i), makes it unlawful, in connection with certain commodity futures transactions, to cheat or defraud or attempt to cheat or defraud another person.

CEA, 4o, 7 U.S.C. 6o, among other things, makes it unlawful for CPOs and CTAs to employ a device,

scheme, or artifice to defraud or to engage in any transaction, practice or course of business which

operates as a fraud or deceit.

Regs. 32.9 and 33.10 make it unlawful, among other things, to cheat or defraud or attempt to cheat or

defraud any other person, make or cause to be made any false report or statement, or deceive or attempt to deceive any other person, in connection with commodity option transactions.

NFA Rule 2–2(a) provides that no member or associate shall cheat, defraud, deceive or attempt to

cheat, defraud, or deceive any commodity futures customer.

See also CEA, 4b(a)(ii), 7 U.S.C. 6b(a)(ii) (unlawful willfully to make or cause to be made any false report or statement); CEA, 4b(a)(iii), 7 U.S.C. 6b(a)(iii) (unlawful willfully to deceive or attempt to deceive another person).

(3) Fail to obtain or submit verifiable authorization before submitting check, draft or other negotiable paper drawn on person’s account for payment; orSigned risk disclosure requirements (discussed above). Reg. 166.2 (prohibits FCMs and IBs from trading for customer account without prior specific authorization or written authorization allowing trading without separate authorization for each individual transaction). Segregation requirements for

handling customer funds also provide protection. CEA, 4d(2), 7 U.S.C. 6d(2), Regs. 1.20–1.30, 1.32,

and 1.36.

(4) Make false/misleading statement to induce payment.Compare to discussion of Section 310.3 above.

(b): Assisting/Facilitating deceptive act/practice to provide substantial assistance or support to

seller or telemarketer when person knows or avoids knowing

seller or telemarketer is engaged

in act/practice that violates Rule.

CEA, 13(a), 7 U.S.C. 13c(a) (Aiding and Abetting): person who commits, or willfully aids, abets, counsels, commands, induces or procures commission of a violation of CEA, may be held responsible as

principal. CEA, 13(b), 7 U.S.C. 13c(b) (Controlling Person): person who directly or indirectly controls any person who has violated CEA or Commission rules may be liable for violation to the same

extent as controlled person. CEA, 2(a)(1)(A)(iii), 7 U.S.C. 4 (Vicarious Liability): corporations, partnerships, associations, and individuals liable for acts and omissions of employees and agents. Reg.

166.3 (Supervision): registrants must supervise diligently their employees and agents in all aspects

of their futures activities.

(c): Credit Card Laundering ........... To the extent credit card laundering is part of a scheme to violate the CEA or Commission Regulations, CEA, 13, 7 U.S.C. 13c (Aiding and Abetting) could be used to address conduct.

SECTION 310.4: ABUSIVE TELEMARKETING ACTS OR PRACTICES

(a): Abusive Conduct Generally—

It is abusive conduct to:
32326 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules and Regulations

(1) Engage in threats, intimidation or use profane or obscene language;.NFA Compliance Rule 2–29(a)(2) prohibits high pressure sales practices, including threatening or intimidating solicitations and the use of profane or obscene language. See NFA’s recent Notice to

Members 19 (confirming that NFA Compliance Rule 2–29(a)(2) prohibits threats and intimidation,

calling at irregular hours, and the use of profane or obscene language).20

NFA Compliance Rule 2–9 requires each NFA member to supervise diligently its employees and

agents in all aspects of their futures activities. Interpretive Notice to NFA Compliance Rule 2–9 imposes enhanced telemarketing supervisory requirements, including tape-recording certain sales solicitations, on a member firm if a certain threshold number or percentage of its APs formerly were

employed by firms disciplined by NFA or the CFTC for sales practice fraud.

(2) Request/receive payment

to remove derogatory information from credit history

unless listed conditions

met;.

See Comparison with 310.3(c).

(3) Request/receive payment

for recovering money or any

item of value paid in previous telephone transaction;

or.

See Comparison with 310.3(c).

(4) Request/receive payment

before securing loan and indicating high chance of getting loan.

See Comparison with 310.3(c).

(b): Pattern of Calls Abusive

act/practice to: (i) make

calls repeatedly or continuously with intent to annoy,

abuse or harass; or (ii) initiate call when person has

stated that he/she does not

want to receive call.

See Comparison with 310.4(a) (NFA Compliance Rule 2–29(a)(2), NFA Notice to Members, and NFA

Compliance Rule 2–9). NFA considers pattern of calls in initiating complaints under NFA Compliance Rule 2–29(a)(2).21

(c): Calling Time Restrictions

Calls must be between 8:00

a.m. and 9:00 p.m.

See Comparison with 310.4(a) (NFA Compliance Rule 2–29(a)(2), NFA Notice to Members).22

(d) Required Oral Disclosures See Comparison with 310.4(a) (NFA Compliance Rule 2–29(a)(2) and NFA Compliance Rule 2–9).

Abusive telemarketing act

NOT to disclose: seller’s identity; call’s purpose; nature of goods/

services; and that no

purchase necessary to

win prize or participate

in promotion.

General antifraud provisions apply to oral statements, and additional requirements govern promotional

materials and advertisements (Reg. 4.41 for CPOs/CTAs; NFA Compliance Rule 2–9 and Interpretive

Notice). NFA Rules on disclosure and promotional materials also require certain information concerning a customer’s ‘‘break-even’’ point as well as balanced presentation.

In addition, prior to trading, extensive written disclosure and acknowledgement requirements must be

met. See Regs. 1.55, 4.13, 4.21, 4.24, 4.25, 4.31, 4.34, 4.35, 33.7, 32.5, 30.6, 31.11. Regs. 1.55 and

33.7 require FCMs and IBs to furnish ‘‘Risk Disclosure Statement’’ and receive acknowledgement.23

Reg. 4.21 requires CPOs to provide disclosure document before soliciting, accepting, or receiving

funds. Reg. 4.13 applies to exempt CPOs. Reg. 4.31 requires CTAs to provide disclosure document

before soliciting or entering into agreement with prospective client.

SECTION 310.5: RECORDKEEPING

(a) Seller/telemarketer must keep

the following for 24 months

from date produced: advertisements, brochures, scripts, promotional materials; name/address of prize recipients and

prizes of $25 or more awarded;

name/address of customers and

goods purchased; name/address/

telephone and job titles of sales

employees; and verification authorizations.

Recordkeeping Requirements under CEA and Commission Regulations. See CEA, 4g, 4n, 7 U.S.C. 6g,

6n; Regs. 1.12, 1.18, 1.31, 1.33, 1.34, 1.35, 1.37, 1.55, 3.12, 4.23, and 4.32.24 Generally, Reg. 1.31 requires all required books and records be kept for 5 years, and be readily accessible for CFTC and Department of Justice inspection for the first 2 years.

Registration requirements for APs, see Reg. 3.12, cover certain information required by FTC rule. NFA

Compliance Rule 2–29 and accompanying Interpretive Notice impose recordkeeping and other requirements for brochures, scripts, and promotional material. NFA Rule 2–10 requires members to

maintain all books and records appropriate to the conduct of their business. See also Reg. 1.40

(FCMs and contract markets must furnish CFTC, upon request, copies of letters, circulars, telegrams

or reports published or given general circulation on crop or market information or conditions affecting the price of any commodity).

(b) Keep records as in manner

seller/telemarketer keeps

records in ordinary course of

business.

See Comparison for 310.5(a).
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules and Regulations 32327

25As part of its audit and compliance functions,

NFA conducts ‘‘front-office audits,’’ which address

sales practices, including telemarketing.

26NFA’s obligation to report on any such

telemarketing acts and practices is separate from,

and additional to, its existing reporting and

auditing obligations under the CEA and

Commission Regulations.

(c) Seller and telemarketer may,

by written agreement, allocate

recordkeeping obligations.

See Comparison for 310.5(a).

(d) Governs recordkeeping upon

dissolution or sale of business.

See Comparison for 310.5(a).

SECTION 310.7: ACTIONS BY STATES AND PRIVATE PERSONS

(a): Requires Attorney General,

other State officers authorized

to bring suit, and any private

person who brings an action

under Telemarketing Act to

serve written notice of action on

FTC.

CEA, 6d, 7 U.S.C. 13a–2, authorizes states to prosecute violations of CEA in federal court; notice of filing and copy of pleading must be given to the CFTC.

CEA, 14, 7 U.S.C. 18 (Reparations Procedure) authorizes reparations actions by any person complaining of violation of CEA, Commission Regulations, or Commission order by a registrant. See also Part

12 of Regs. (Rules Relating to Reparations Proceedings).

CEA, 17(b)(10), 7 U.S.C. 21(b)(10), requires NFA to provide procedure through arbitration or otherwise

to settle customer claims and grievances against its members. NFA Code of Arbitration, Section 2

provides generally that members must submit to arbitration for any dispute filed with NFA by a customer. See also Reg. 170.8 (Settlement of Customer Disputes).

(b): Nothing in this section prohibits Attorney General or other

authorized State officials from

proceeding in State court for

violations of any civil or criminal state statute.

CEA, 6d(8), 7 U.S.C. 13a–2(8), allows states to proceed in state court against certain registrants for violations of antifraud provisions. CEA, 12(e), 7 U.S.C. 16(e), authorizes states to proceed in state court

for illegal ‘‘off-exchange’’ transactions.

19See NFA Notice to Members (June 19, 1996). 20Of the thirty-eight complaints that NFA has issued alleging a violation of NFA Compliance Rule 2–29(a)(2), NFA considered a pattern

of inappropriate calling (i.e., calling at irregular hours or making excessive calls) as a factor in initiating eighteen cases and the use of profane language as a factor in three cases. 21As confirmed by NFA’s recent Notice to Members, repeated or continuous calls made with an intent to annoy, abuse, or harass are specifically prohibited by Rule 2–29(a)(2). 22NFA considers the time when calls were placed when issuing complaints under NFA Compliance Rule 2–29(a)(2). See supra n. 20. 23Neither Reg. 1.55 nor Reg. 33.7 relieves FCMs and IBs from otherwise applicable disclosure and other requirements. See Reg. 1.55(f)

(FCMs and IBs not relieved from any other disclosure obligation under applicable law); Reg. 33.7(f) (FCMs and IBs not relieved from any

other obligation under CEA or CFTC regulations, including obligation to disclose all material information). 24Regs. 1.10, 1.12, 1.18, 1.31, 1.32, 1.35 govern recordkeeping and reporting obligations for FCMs and IBs. Reg. 1.33 requires FCMs to furnish monthly and confirmation statements. Reg. 1.34 requires FCMs to keep ‘‘point balance’’ and monthly listings of open option positions

carried for option customers marked to market. CEA, 4n, 7 U.S.C. 6n, requires CPOs and CTAs to keep books and records for at least 3

years, but is superseded by the general five-year requirement of Reg. 1.31. Regs. 4.23 and 4.33 also govern recordkeeping by CPOs and

CTAs.

D. Conclusion

As the chart and discussion above

reflect, existing provisions of the CEA,

Commission Regulations, and NFA rules

address and prohibit many of the same

categories of telemarketing abuse

targeted by the FTC’s recently

promulgated Telemarketing Sales Rule.

Accordingly, the CFTC has determined

that existing rules provide protection

from deceptive and abusive

telemarketing acts and practices that is

‘‘substantially similar’’ to the protection

provided by the FTC’s rule. Given its

determination, the CFTC has also

determined that it is unnecessary for it

to promulgate additional telemarketing

rules under the Telemarketing Act at

this time.

To ensure that it remains apprised of

developments in the area of

telemarketing, however, the CFTC has

asked NFA to continue to focus, in the

course of performing member audits,25

on telemarketing acts and practices that

it believes may fall outside the scope of

existing rules and to inform the

Commission of the results of those

audits.26 Should the information

provided by NFA indicate a need for

additional telemarketing rules,

advisories, or other guidance, the

Commission will work with NFA to

undertake rulemaking or other activities

necessary to provide appropriate

protection. Through such ongoing

monitoring and evaluation of

telemarketing acts and practices, the

CFTC will ensure that its rules continue

to provide protection from deceptive

and abusive telemarketing acts and

practices as those practices may arise in

the future.

Issued in Washington, DC, on June 18,

1996.

Jean A. Webb,

Secretary to the Commission.

[FR Doc. 96–15995 Filed 6–21–96; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF STATE

Office of Protocol

22 CFR Part 4

[Public Notice 2402]

Notification of Foreign Official Status;

Elimination and Reinvention of

Regulations

AGENCY: Office of Protocol, State.

ACTION: Final rule.

SUMMARY: The Department of State is

eliminating and reinventing its

regulations as part of the President’s

Regulatory Reinvention Initiative. In

furtherance of this project, the Office of

Protocol has determined that 22 CFR

Part 4 should be updated and clarified

to reflect changes which have occurred

since that part originally was published.

EFFECTIVE DATE: June 24, 1996.

FOR FURTHER INFORMATION CONTACT:

Lawrence Dunham, Assistant Chief of

Protocol (202) 647–1985.

SUPPLEMENTARY INFORMATION: 22 CFR,

Part 4 is that portion of the

Department’s regulations setting forth