FCC expected to limit brokers' 'cold calls' Move would alter way companies conduct business


NEW YORK -- The Federal Communications Commission is expected to establish rules regulating telemarketing next month that could severely restrict securities brokers' unsolicited calls to potential clients.

The unsolicited calls, known as "cold calls," are an important part of a broker's business, especially for new brokers who use these calls to start client relationships, said Michael Esser, a principal at Edward D. Jones, a securities firm that deals primarily with individual investors.

"It's the only way new salespeople can develop a clientele," he said. "It's going to be a major shift in the way securities firms do business."

The FCC is expected to regulate cold calling in a broader law called the Telephone Consumer Protection Act of 1991, said William Jordan, a director at the Securities Industry Association, a trade group. The law, signed by President Bush in December, was written to protect people from unwanted solicitations.

The law is expected to limit computer-driven calls and automated phone solicitations. It also might help reduce high-pressure telephone pitches by stockbrokers.

An FCC spokesman declined to comment on the agency's plans. Mr. Jordan said the FCC probably will limit brokers to making cold calls between 9 a.m. and 9 p.m. That would be reasonable, stockbrokers said.

"I don't think it'll have a bad effect," said Mark Fischer, a corporate financial consultant at Merrill Lynch & Co.'s Baltimore branch. "Sometimes, I'm sitting at home and I get a call at quarter to 10. Then you're pushing the limit."

The FCC also might require securities firms to compile and maintain "do not call" lists to warn brokers against calling people who have already said they don't want to be solicited over the phone.

That rule probably would work, but only if warnings last for a limited time, say six months, Mr. Fischer said.

The industry group is concerned that more restrictive proposals, though developed to protect people from high-pressure sales, might keep legitimate brokers from doing business, Mr. Jordan said. Mr. Fischer said 25 percent to 30 percent of his new clients came from cold calls when he started as a broker 11 years ago.

States may pass their own rules on cold calling if they think the FCC hasn't gone far enough, Mr. Jordan said. About 20 states are considering legislation regulating cold calling, he said.

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