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Cold Calling

Feb. 14, 2012

Many securities firms telephone investors they do not know to sell stocks and other investments.  These "cold calls" can serve as a legitimate way of reaching new customers, but they can also lead to trouble.  Dishonest brokers may pressure you to buy a bad investment or a scam.  Whether the calls are annoying, abusive, or downright crooked, you can stop cold callers. The law protects you by requiring cold callers to follow several rules:

  • Cold callers may only call you at home between 8:00 a.m. and 9:00 p.m.  These time restrictions do not apply if you are already a customer of the firm or you've given the firm permission to call you at other times.  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, address or telephone number and that the purpose of the call is to sell you an investment.
  • Cold callers must 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 and telephone number on the firm's “Do Not Call” 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, and your state's securities regulator.
  • Cold Caller must avoid calls to you if you are on the National “Do Not Call” Registry managed by the Federal Trade Commission.  If you want to sign up, go to  Cold callers cannot call you if you are on this registry, unless you are already a customer, you previously gave written permission, or the caller is a family member, friend, or acquaintance.  However, even if any of those exceptions applies, you can still stop calls by asking the caller to put your name and telephone number on the firm’s “Do Not Call” list.  The FTC also accepts online complaints about unwanted calls from those on the National “Do Not Call” registry.
  • Cold callers must get your written approval before taking money directly from your bank accounts.  Before investing, you should always get answers to your questions and written information about the investment.  If you decide to buy from a cold caller, do not give your checking or savings account numbers to the broker over the phone. Brokers must get your written permission - such as your signature on a check or an authorization form - before they can take money from your checking or savings account.
  • Cold callers must tell you the truth.  People selling securities must tell you the truth.  Brokers who lie to you about any important aspect of an investment opportunity violate federal and state securities laws.

If a cold caller violates any of these rules, you can complain to the firm's compliance officer and the Financial Industry Regulatory Authority (FINRA). If a cold caller uses harassing, abusive sales tactics or lies to you about an investment, you should contact the SEC or the North American Securities Administrators Association to find your state's securities regulator.

For additional information about how to recognize cold calling, see our publication Cold Calling Alert.

We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

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