Document ID: SEC-2012-1139-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2012-07-16T04:00Z

[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41824-41829]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17171]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67371; File No. SR-NYSEMKT-2012-04]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Deleting NYSE MKT LLC 
Rule 428(a), Which Addresses Telephone Solicitation, and Amending NYSE 
MKT LLC Rule 429, Which Addresses Telemarketing, To Adopt New Rule Text 
To Conform to FINRA's Telemarketing Rule

July 10, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the '' Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice 
is hereby given that on June 25, 2012, NYSE MKT LLC (the ``Exchange'' 
or ``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. 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\ 15 U.S.C. 78a.
    \3\ 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 Exchange proposes to delete Rule 428(a), which addresses 
telephone solicitation, and amend Rule 429, which addresses 
telemarketing, to adopt new rule text that is substantially similar to 
FINRA Rule 3230. The text of the proposed rule change is available on 
the Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 Exchange 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 those statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to delete Rule 428(a), which addresses 
telephone solicitation, and amend Rule 429, which addresses 
telemarketing, to adopt new rule text that is substantially similar to 
FINRA Rule 3230.\4\
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    \4\ See Securities Exchange Act Release No. 66279 (January 30, 
2012), 77 FR 5611 (February 3, 2012) (SR-FINRA-2011-059). FINRA's 
rule change will become effective on July 9, 2012. See FINRA 
Regulatory Notice 12-17.
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Proposed Rule Change
    The Exchange proposes to delete Rule 428(a), amend Rule 429, and 
adopt new rule text to Rule 429 to conform to the changes adopted by 
FINRA for telemarketing. FINRA adopted NASD Rule 2212 as FINRA Rule 
3230, taking into account FINRA Incorporated New York Stock Exchange 
LLC (``NYSE'') Rule 440A and NYSE Interpretation 440A/01. FINRA Rule 
3230 adds provisions that are substantially similar to Federal Trade 
Commission (``FTC'') rules that prohibit deceptive and other abusive 
telemarketing acts or practices.
    NASD Rule 2212 and Rules 428 and 429 are similar rules that require 
members, among other things, to maintain do-not-call lists, limit the 
hours of telephone solicitations and prohibit members from using 
deceptive and abusive acts and practices in connection with 
telemarketing. The Commission directed FINRA and the Exchange to enact 
these telemarketing rules in accordance with the Telemarketing Consumer 
Fraud and Abuse Prevention Act of 1994 (``Prevention Act'').\5\ 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.\6\
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    \5\ 15 U.S.C. 6101-6108.
    \6\ 15 U.S.C. 6102.
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    In 2003, the FTC and the Federal Communications Commission 
(``FCC'')

[[Page 41825]]

established requirements for sellers and telemarketers to participate 
in the national do-not-call registry.\7\ Pursuant to the Prevention 
Act, the Commission requested that FINRA and the Exchange amend their 
telemarketing rules to include a requirement that their members 
participate in the national do-not-call registry. In 2004, the 
Commission approved amendments to NASD Rule 2212 requiring member firms 
to participate in the national do-not-call registry.\8\ The following 
year, the Commission approved amendments to Rule 429, which were 
similar to the NASD rule amendments, but included additional provisions 
regarding the use of caller identification information, pre-recorded 
messages, telephone facsimiles and computer advertisements.\9\
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    \7\ See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25, 
2003); CG Docket No. 02-278, FCC 03-153, (adopted June 26, 2003; 
released July 3, 2003).
    \8\ See Securities Exchange Act Release No. 49055 (January 12, 
2004), 69 FR 2801 (January 20, 2004) (Order Approving File No. SR-
NASD-2003-131).
    \9\ See Securities Exchange Act Release No. 52844 (December 5, 
2005), 70 FR 72477 (November 28, 2005) (Order Approving File No. SR-
Amex-2005-064).
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    As mentioned 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.\10\ In 2011, Commission staff directed all exchanges 
and FINRA to conduct a review of their telemarketing rules and propose 
rule amendments that provide protections that are at least as strong as 
those provided by the FTC's telemarketing rules. FINRA's adoption of 
FINRA Rule 3230 reflects amendments to NASD Rule 2212 and FINRA 
Incorporated NYSE Rule 440A that update those rules to meet the 
standards of the Prevention Act.\11\
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    \10\ 15 U.S.C. 6102.
    \11\ See Securities Exchange Act Release No. 65645 (October 27, 
2011), 76 FR 67787 (November 2, 2011) (Order Approving File No. SR-
FINRA-2011-059).
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    The proposed rule change, as directed by the Commission staff, 
adopts provisions in proposed Rule 429 that are substantially similar 
to the FTC's current rules that prohibit deceptive and other abusive 
telemarketing acts or practices as described below.\12\
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    \12\ The text of proposed Rule 429 would be the same as FINRA 
Rule 3230, except that the Exchange would substitute the term 
``member organization'' for ``member.''
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Telemarketing Requirements
    Proposed Rule 429(a) provides that no member organization or person 
associated with a member organization shall initiate any outbound 
telephone call \13\ to:
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    \13\ An ``outbound telephone call'' is a telephone call 
initiated by a telemarketer to induce the purchase of goods or 
services or to solicit a charitable contribution from a donor. A 
``customer'' is any person who is or may be required to pay for 
goods or services through telemarketing. A ``donor'' means any 
person solicited to make a charitable contribution. A ``person'' is 
any individual, group, unincorporated association, limited or 
general partnership, corporation, or other business entity. 
``Telemarketing'' means consisting of or relating to a plan, 
program, or campaign involving at least one outbound telephone call, 
for example cold-calling. The term does not include the solicitation 
of sales through the mailing of written marketing materials, when 
the person making the solicitation does not solicit customers by 
telephone but only receives calls initiated by customers in response 
to the marketing materials and during those calls takes orders only 
without further solicitation. For purposes of the previous sentence, 
the term ``further solicitation'' does not include providing the 
customer with information about, or attempting to sell, anything 
promoted in the same marketing materials that prompted the 
customer's call. See proposed Rule 429(m)(11), (14), (16), (17), and 
(20); see also FINRA Rule 3230(m)(11), (14), (16), (17), and (20); 
and 16 CFR 310.2(f), (l), (n), (v), (w), and (dd).
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    (1) Any residence of a person before the hour of 8 a.m. or after 9 
p.m. (local time at the called party's location), unless the member 
organization has an established business relationship \14\ with the 
person pursuant to paragraph 3230(m)(12)(A), the member organization 
has received that person's prior express invitation or permission, or 
the person called is a broker or dealer;
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    \14\ An ``established business relationship'' is a relationship 
between a member organization and a person if (i) the person has 
made a financial transaction or has a security position, a money 
balance, or account activity with the member organization or at a 
clearing firm that provides clearing services to the member 
organization within the 18 months immediately preceding the date of 
an outbound telephone call; (b) the member organization is the 
broker-dealer of record for an account of the person within the 18 
months immediately preceding the date of an outbound telephone call; 
or (c) the person has contacted the member organization to inquire 
about a product or service offered by the member organization within 
the three months immediately preceding the date of an outbound 
telephone call. A person's established business relationship with a 
member organization does not extend to the member organization's 
affiliated entities unless the person would reasonably expect them 
to be included. Similarly, a person's established business 
relationship with a member organization's affiliate does not extend 
to the member organization unless the person would reasonably expect 
the member organization to be included. The term ``account 
activity'' includes, but is not limited to, purchases, sales, 
interest credits or debits, charges or credits, dividend payments, 
transfer activity, securities receipts or deliveries, and/or journal 
entries relating to securities or funds in the possession or control 
of the member organization. The term ``broker-dealer of record'' 
refers to the broker or dealer identified on a customer's account 
application for accounts held directly at a mutual fund or variable 
insurance product issuer. See proposed Rule 429(m)(1), (4), and 
(12); see also 16 CFR 310.2(o) and FINRA Rule 3230(m)(1), (4), and 
(12).
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    (2) Any person that previously has stated that he or she does not 
wish to receive an outbound telephone call made by or on behalf of the 
member organization;\15\ or
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    \15\ This restriction was previously included under Rule 429(a). 
See the discussion below under Procedures.
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    (3) Any person who has registered his or her telephone number on 
the FTC's national do-not-call registry.
    The proposed rule change is substantially similar to the FTC's 
provisions regarding abusive telemarketing acts or practices.\16\ The 
FTC provided a discussion of the provision when it was adopted pursuant 
to the Prevention Act.\17\
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    \16\ See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c); see also 
FINRA Rule 3230(a).
    \17\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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National Do-Not-Call List Exceptions
    Proposed Rule 429(b) provides that a member organization making 
outbound telephone calls will not be liable for initiating any outbound 
telephone call to any person who has registered his or her telephone 
number on the FTC's national do-not-call registry if:
    (1) The member organization has an established business 
relationship with the recipient of the call;\18\
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    \18\ A person's request to be placed on the firm-specific do-
not-call list terminates the established business relationship 
exception to that national do-not-call list provision for that 
member organization even if the person continues to do business with 
the member organization.
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    (2) The member organization has obtained the person's prior express 
invitation or permission;\19\ or
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    \19\ Such permission must be evidenced by a signed, written 
agreement (which may be obtained electronically under the E-Sign Act 
(See 15 U.S.C. 7001 et seq.) between the person and member 
organization which states that the person agrees to be contacted by 
the member organization and includes the telephone number to which 
the calls may be placed.
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    (3) The associated person making the call has a personal 
relationship \20\ with the recipient of the call.
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    \20\ The term ``personal relationship'' means any family member, 
friend, or acquaintance of the person making an outbound telephone 
call. See proposed Rule 429(m)(18); see also FINRA Rule 3230(m)(18).
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    The proposed rule change modifies the established business 
relationship exception in Rule 429 and the definition for ``established 
business relationships,'' which is substantially similar to the FTC's 
definition of that term.\21\ In addition, the proposed rule change is 
substantially similar to the FTC's provision regarding an exception to 
the prohibition on making outbound telephone calls to persons on the 
FTC's

[[Page 41826]]

do-not-call registry.\22\ The FTC provided a discussion of the 
provision when it was adopted pursuant to the Prevention Act.\23\
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    \21\ See supra note14; see also FINRA Rule 3230(a).
    \22\ See 16 CFR 3l0.4(b)(1)(iii)(B); see also FINRA Rule 
3230(b).
    \23\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43854.
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Safe Harbor Provision
    Proposed Rule 429(c) provides that a member organization or person 
associated with a member organization making outbound telephone calls 
will not be liable for initiating any outbound telephone call to any 
person who has registered his or her telephone number on the FTC's 
national do-not-call registry if the member organization or person 
associated with a member organization demonstrates that the violation 
is the result of an error and that as part of the member organization's 
routine business practice, it meets the following standards:
    (1) The member organization has established and implemented written 
procedures to comply with the national do-not-call rules;
    (2) The member organization has trained its personnel, and any 
entity assisting in its compliance, in procedures established pursuant 
to the national do-not-call rules;
    (3) The member organization has maintained and recorded a list of 
telephone numbers that it may not contact; and
    (4) The member organization uses a process to prevent outbound 
telephone calls to any telephone number on any list established 
pursuant to the do-not-call rules, employing a version of the national 
do-not-call registry obtained from the administrator of the registry no 
more than 31 days prior to the date any call is made, and maintains 
records documenting this process.
    The proposed rule change is substantially similar to the FTC's safe 
harbor to the prohibition on making outbound telephone calls to persons 
on the FTC's national do-not-call registry.\24\ The FTC provided a 
discussion of the provision when it was adopted pursuant to the 
Prevention Act.\25\
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    \24\ See 16 CFR 310.4(b)(1)(iii)(B); see also FINRA Rule 
3230(c).
    \25\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (Jan. 29, 2003) at 4628; and Federal Trade Commission, 
Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995) at 43855.
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Procedures
    Proposed Rule 429(d) adopts procedures that member organizations 
must institute to comply with Rule 429(a) prior to engaging in 
telemarketing. These procedures are substantially similar to the 
procedural requirements under Rule 429(d); however, the proposed rule 
change deletes the requirement that a member organization honor a firm-
specific do-not-call request for five years from the time the request 
is made. Additionally, the proposed rule change clarifies that the 
request not to receive further calls would come from a person. The 
procedures must meet the following minimum standards:
    (1) Member organizations must have a written policy for maintaining 
their do-not-call lists.
    (2) Personnel engaged in any aspect of telemarketing must be 
informed and trained in the existence and use of the member 
organization's do-not-call list.
    (3) If a member organization receives a request from a person not 
to receive calls from that member organization, the member organization 
must record the request and place the person's name, if provided, and 
telephone number on its do-not-call list at the time the request is 
made.\26\
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    \26\ Member organizations must honor a person's do-not-call 
request within a reasonable time from the date the request is made, 
which may not exceed 30 days from the date of the request. If these 
requests are recorded or maintained by a party other than the member 
organization on whose behalf the outbound telephone call is made, 
the member organization on whose behalf the outbound telephone call 
is made will still be liable for any failures to honor the do-not-
call request.
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    (4) Member organizations or persons associated with a member 
organization making an outbound telephone call must make certain caller 
disclosures set forth in Rule 429(d)(4).
    (5) In the absence of a specific request by the person to the 
contrary, a person's do-not-call request shall apply to the member 
organization making the call, and will not apply to affiliated entities 
unless the consumer reasonably would expect them to be included given 
the identification of the call and the product being advertised.
    (6) A member organization making outbound telephone calls must 
maintain a record of a person's request not to receive further calls.
    Inclusion of this requirement to adopt these procedures will not 
create any new obligations on member organizations, as they are already 
subject to identical provisions under FCC telemarketing 
regulations.\27\
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    \27\ See 47 CFR 64.1200(d); see also FINRA Rule 3230(d).
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Wireless Communications
    Proposed Rule 429(e) states that the provisions set forth in the 
rule are applicable to member organizations telemarketing or making 
telephone solicitations calls to wireless telephone numbers. In 
addition, proposed Rule 429(e) clarifies that the application of the 
rule also applies to persons associated with a member organization 
making outbound telephone calls to wireless telephone numbers.\28\
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    \28\ See also FINRA Rule 3230(e).
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Outsourcing Telemarketing
    Rule 429(f) states that if a member organization uses another 
entity to perform telemarketing services on its behalf, the member 
organization remains responsible for ensuring compliance with all 
provisions contained in the rule. Proposed Rule 429(f) also clarifies 
that member organizations must consider whether the entity or person 
that a member organization uses for outsourcing, must be appropriately 
registered or licensed, where required.\29\
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    \29\ See also FINRA Rule 3230(f).
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Caller Identification Information
    Proposed Rule 429(g) provides that any member organization that 
engages in telemarketing must transmit or cause to be transmitted the 
telephone number, and, when made available by the member organization's 
telephone carrier, the name of the member organization, to any caller 
identification service in use by a recipient of an outbound telephone 
call. The telephone number so provided must permit any person to make a 
do-not-call request during regular business hours. In addition, any 
member organization that engages in telemarketing is prohibited from 
blocking the transmission of caller identification information.\30\
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    \30\ Caller identification information includes the telephone 
number and, when made available by the member organization's 
telephone carrier, the name of the member organization.
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    These provisions are similar to the caller identification provision 
in the FTC rules.\31\ Inclusion of these caller identification 
provisions in this proposed rule change will not create any new 
obligations on member organizations, as they are already subject to 
identical provisions under FCC telemarketing regulations.\32\
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    \31\ See 16 CFR 310.4(a)(8); see also FINRA Rule 3230(g).
    \32\ See 47 CFR 64.1601(e).
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Unencrypted Consumer Account Numbers
    Proposed Rule 429(h) prohibits a member organization or person 
associated with a member organization from disclosing or receiving, for 
consideration, unencrypted consumer account numbers for use in 
telemarketing. The proposed rule

[[Page 41827]]

change is substantially similar to the FTC's provision regarding 
unencrypted consumer account numbers.\33\ The FTC provided a discussion 
of the provision when it was adopted pursuant to the Prevention 
Act.\34\ Additionally, the proposed rule change defines ``unencrypted'' 
as not only complete, visible account numbers, whether provided in 
lists or singly, but also encrypted information with a key to its 
decryption. The proposed definition is substantially similar to the 
view taken by the FTC.\35\
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    \33\ See 16 CFR 310.4(a)(6); see also FINRA Rule 3230(h).
    \34\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4615.
    \35\ See id. at 4616.
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Submission of Billing Information
    The proposed rule change provides that, for any telemarketing 
transaction, no member organization or person associated with a member 
organization may submit billing information \36\ for payment without 
the express informed consent of the customer. Proposed Rule 429(i) 
requires, for any telemarketing transaction, a member organization or 
person associated with a member organization to 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 \37\ and a free-to-pay conversion \38\ 
feature, the member organization or person associated with a member 
organization must:
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    \36\ The term ``billing information'' means any data that 
enables any person to access a customer's or donor's account, such 
as a credit or debit card number, a brokerage, checking, or savings 
account number, or a mortgage loan account number. See proposed Rule 
429(m)(3).
    \37\ The term ``preacquired account information'' means any 
information that enables a member organization or person associated 
with a member organization 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 429(m)(19).
    \38\ The term ``free-to-pay conversion'' means, 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 429(m)(13).
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    (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 member organization or person associated with 
a member organization must:
    (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 proposed rule change is substantially similar to the FTC's 
provision regarding the submission of billing information.\39\ The FTC 
provided a discussion of the provision when it was adopted pursuant to 
the Prevention Act.\40\
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    \39\ See 16 CFR 310.4(a)(7); see also FINRA Rule 3230(i).
    \40\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4615.
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Abandoned Calls
    Proposed Rule 429(j) prohibits a member organization or person 
associated with a member organization from abandoning \41\ any outbound 
telemarketing call. The abandoned calls prohibition is subject to a 
``safe harbor'' under proposed subparagraph (j)(2) that requires:
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    \41\ An outbound telephone call is ``abandoned'' if the called 
person answers it and the call is not connected to a member 
organization or person associated with a member organization within 
two seconds of the called person's completed greeting.
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    (1) The member organization or person associated with a member 
organization 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) The member organization or person associated with a member 
organization, for each telemarketing call placed, allows the telephone 
to ring for at least 15 seconds or four rings before disconnecting an 
unanswered call;
    (3) Whenever a person associated with a member organization is not 
available to speak with the person answering the telemarketing call 
within two seconds after the person's completed greeting, the member 
organization or person associated with a member organization promptly 
plays a recorded message stating the name and telephone number of the 
member organization or person associated with a member organization on 
whose behalf the call was placed; and
    (4) The member organization to maintain records documenting 
compliance with the ``safe harbor.''
    The proposed rule change is substantially similar to the FTC's 
provisions regarding abandoned calls.\42\ The FTC provided a discussion 
of the provisions when they were adopted pursuant to the Prevention 
Act.\43\
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    \42\ See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4).
    \43\ See Federal Trade Commission, Telemarketing Sales Rule, 68 
FR 4580 (January 29, 2003) at 4641.
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Prerecorded Messages
    Proposed Rule 429(k) prohibits a member organization or person 
associated with a member organization from initiating any outbound 
telemarketing call that delivers a prerecorded message without a 
person's express written agreement \44\ to receive such calls. The 
proposed rule change also requires that all prerecorded telemarketing 
calls provide specified opt-out mechanisms so that a person can opt out 
of future calls. The prohibition does not apply to a prerecorded 
message permitted for compliance with the ``safe harbor'' for abandoned 
calls under proposed subparagraph (j)(2).
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    \44\ The express written agreement must: (a) have been obtained 
only after a clear and conspicuous disclosure that the purpose of 
the agreement is to authorize the member organization 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 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 member organization; and 
(d) include the person's telephone number and signature (which may 
be obtained electronically under the E-Sign Act).
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    The proposed rule change is substantially similar to the FTC's 
provisions regarding prerecorded messages.\45\ The FTC provided a 
discussion of the provisions when they were adopted pursuant to the 
Prevention Act.\46\
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    \45\ See 16 CFR 310.4(b)(1)(v); see also FINRA Rule 3230(k).
    \46\ See Federal Trade Commission, Telemarketing Sales Rule, 73 
FR 51164 (August 29, 2008) at 51165.
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Credit Card Laundering
    Proposed Rule 429(l) prohibits credit card laundering, the practice 
of depositing into the credit card system \47\ a sales draft that is 
not the result of a credit card transaction between the

[[Page 41828]]

cardholder \48\ and the member organization. Except as expressly 
permitted, the proposed rule change prohibits a member organization or 
person associated with a member organization from:
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    \47\ The term ``credit card system'' means 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'' means 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'' means 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 429(m)(7), (8), and (10).
    \48\ The term ``cardholder'' means 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 429(m)(6).
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    (1) Presenting to or depositing into, the credit card system for 
payment, a credit card sales draft \49\ generated by a telemarketing 
transaction that is not the result of a telemarketing credit card 
transaction between the cardholder and the member organization;
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    \49\ The term ``credit card sales draft'' means any record or 
evidence of a credit card transaction. See proposed Rule 429(m)(9).
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    (2) Employing, soliciting, or otherwise causing a merchant,\50\ 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
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    \50\ The term ``merchant'' means a person who is authorized 
under 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. 
The term ``acquirer'' means 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. A 
``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 429(m)(2) and (14).
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    (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 \51\ or the 
applicable credit card system.
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    \51\ The term ``merchant agreement'' means 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 charitable contribution. See 
proposed Rule 429(m)(15).
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    The proposed rule change is substantially similar to the FTC's 
provisions regarding credit card laundering.\52\ The FTC provided a 
discussion of the provisions when they were adopted pursuant to the 
Prevention Act.\53\
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    \52\ See 16 CFR 310.2; see also FINRA Rule 3230(l).
    \53\ See Federal Trade Commission, Telemarketing Sales Rule, 60 
FR 43842 (August 23, 1995) at 43852.
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Definitions
    Proposed Rule 429(m) adopts the following definitions, which are 
substantially similar to the FTC's definitions of these terms: 
``acquirer,'' ``billing information,'' ``caller identification 
service,'' ``cardholder,'' ``charitable contribution,'' ``credit,'' 
``credit card,'' ``credit card sales draft,'' ``credit card system,'' 
``customer,'' ``donor,'' ``established business relationship,'' ``free-
to-pay conversion,'' ``merchant,'' ``merchant agreement,'' ``outbound 
telephone call,'' ``person,'' ``preacquired account information,'' and 
telemarketing''.\54\ The FTC provided a discussion of each definition 
when they were adopted pursuant to the Prevention Act.
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    \54\ See proposed Rule 429(m)(2), (3), (5), (6), (7), (8), (9), 
(10), (11), (12), (13), (14), (15), (16), (17), (19), and (20); and 
16 CFR 310.2(a), (c), (d), (e), (f), (h), (i), (j), (k), (l), (n), 
(o), (p), (s), (t), (v), (w), (x), and (dd); see also FINRA Rule 
3230(m)(2), (3), (5), (6), (7), (8), (9), (10), (11), (12), (13), 
(14), (15), (16), (17), (19), and (20). The proposed rule change 
also adopts definitions of ``account activity,'' ``broker-dealer of 
record,'' and ``personal relationship'' that are substantially 
similar to FINRA's definitions of these terms. See proposed Rule 
429(m)(1), (4), and (18) and FINRA Rule 3230(m)(1), (4), and (18); 
see also 47 CFR 64.1200(t)(14) (FCC's definition of ``personal 
relationship'').
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    The Exchange proposes to make the new rule text to Rule 429 
effective on the same date as FINRA makes FINRA Rule 3230 
effective.\55\
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    \55\ See supra note 4.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \56\ in general, and furthers the 
objectives of Section 6(b)(5) \57\ in particular, in that it is 
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 facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system. Specifically, the 
Exchange believes that the proposed rule change supports the objectives 
of the Exchange Act by providing greater harmonization between Rules 
and FINRA Rules of similar purpose, resulting in less burdensome and 
more efficient regulatory compliance. In particular, NYSE MKT member 
organizations that are also FINRA members are subject to Rules 428 and 
429 and FINRA Rule 3230 and harmonizing these two rules would promote 
just and equitable principles of trade by requiring a single standard 
for telemarketing. In addition, adopting new rule text to Rule 429 will 
assure that the Exchange's rules governing telemarketing meet the 
standards set forth in the Prevention Act. To the extent the Exchange 
has proposed changes that differ from the FINRA version of the Rules, 
it believes such changes are technical in nature and do not change the 
substance of the proposed Rules. The Exchange also believes that the 
proposed rule change will update and clarify the requirements governing 
telemarketing, which will promote just and equitable principles of 
trade and help to protect investors.
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    \56\ 15 U.S.C. 78f(b).
    \57\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received written comments with 
respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Exchange Act \58\ and Rule 19b-4(f)(6) 
thereunder.\59\ Because the proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative prior to 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, if consistent 
with the protection of investors and the public interest, the proposed 
rule change has become effective pursuant to Section 19(b)(3)(A) of the 
Exchange Act and Rule 19b-4(f)(6)(iii) thereunder.
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    \58\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \59\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \60\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\61\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that

[[Page 41829]]

the proposal may become operative immediately upon filing.
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    \60\ 17 CFR 240.19b-4(f)(6).
    \61\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Exchange Act.

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 Exchange 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2012-04 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 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2012-04. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090 on official business days between the 
hours of 10 a.m. and 3 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-NYSEMKT-2012-04 and 
should be submitted on or before August 6, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\62\
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    \62\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17171 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P