Cold Calling - defending yourself against securities and stock fraud from telemarketers

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This page discusses cold calling securities sales.

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COLD CALLING - KNOW YOUR RIGHTS

The telephone rings as you’re sitting down to dinner or putting the kids to bed. It’s known as cold calling. For many businesses, including securities firms, cold calling serves as a legitimate way to reach potential customers. Sometimes, serious trouble and financial losses await you at the other end of the line.

UNDERSTAND YOUR RIGHTS

Cold Callers Must Check the National Do Not Call Registry
With very few exceptions, federal law requires all telemarketers, including securities firms, to search the National Do Not Call Registry every 31 days to avoid calling any numbers that are on the Registry.
Cold Callers May Call You at Home Only Between 8:00 a.m. and 9:00 p.m.
These time restrictions for calls at home apply unless you have an established business relationship with the firm. Cold callers may call you at work at any time.
Cold Callers Must Say Who’s Calling and Why
       Cold callers must promptly tell you:
       Their name
       Their firm’s name
       Their firm’s address or telephone number
       The purpose of the call

Additional Responsibilities of Cold Callers

Put you on their Do Not Call list, if you ask.
Every securities firm must keep a do not call list. If you want to stop sales calls from that firm, tell the caller to put your name on the list. If anyone from that firm calls you again, get the caller’s name and telephone number, note the date and time of the call, and complain to the firm’s compliance officer, the SEC, the FINRA, or your state’s securities regulator.
Treat you with respect.
Cold callers can’t threaten, intimidate, or use obscene or profane language. They can’t call you repeatedly to annoy, abuse, or harass you.
Get your written approval before taking money directly from your bank accounts.
Before investing, you should always get answers to the questions below and written information about the investment.   Brokers must get your written permission before they can use money from your checking or savings account to fund your investments.
Tell you the truth.
People selling securities must tell you the truth. If they don’t, brokers violate federal and state securities laws.

WHAT ARE SIGNS OF TROUBLE?

Cold calling is used legitimately to find clients for the long term. These callers ask questions to understand your financial situation and investment goals before recommending that you buy anything. Unfortunately, not everyone has your best financial interest at heart. Watch for these signs of trouble:

High-pressure sales tactics.
Aggressive cold callers speak from persuasive scripts that include retorts for your every objection. As long as you stay on the phone, they’ll keep trying to sell.
Pitches that stress once-in-a-lifetime opportunities.
Watch out for someone who tells you about a once-in-a-lifetime opportunity, especially when the caller bases the recommendation on inside or confidential information.
Callers touting companies with breakthrough technologies.
These technologies often play ofF legitimate technologies but are just a little too good to be true.
Callers who refuse to send you written information about the investment.
This is a form of manipulation designed to force a quick decision. You should be able to receive information about an investment and take as much time as you need to review it.
Calls from unregistered and unsupervised salespersons.
Cold-calling brokers and their bosses may not be properly registered to sell securities and often operate in an environment completely devoid of required supervisory procedures. You can verify whether the caller is registered to sell securities by using FINRA BrokerCheck.

WHAT ELSE CAN YOU DO?

When cold callers use harassing, abusive sales tactics and lie to you about investment opportunities, they violate the cold calling rules and break federal and state securities laws. Don’t let them off the hook!

Report abusive cold callers.
File a complaint with the SEC, FINRA, your state regulator, or the FTC:
Tell intrusive cold callers not to call again.
Stop them before they start their sales pitch. Put your name on the National Do Not Call Registry and inform the cold caller your name is on the list. Tell the caller to put you on the firm’s do not call list.
Don’t warm up to intrusive cold callers.
Cold callers often try to warm up potential customers with flattery or friendship. They might try to put you off guard by chatting about your hometown or the local sports team. Don’t feel compelled to be polite or stay on the line. You don’t have to listen if you don’t want to and you don’t have to tell cold callers about yourself or your finances. Say “no, thanks” or “I’m not interested” -- and then hang up. Don’t wait for the caller to end the call. YOU are in control and can hang up at any time.

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