Compliance with Sarbanes‐Oxley and do not call regulations is interdependent when telemarketing is a core part of a sales strategy

Abstract

Purpose

This paper aims to explain the importance of a do not call (DNC) regulations compliance program for broker‐dealers and other investment companies as part of an overall Sarbanes‐Oxley (SOX) compliance strategy.

Design/methodology/approach

The paper explains why an effective DNC Regulations compliance program is needed, the consequences of violations, and the control objectives an effective DNC solution should address.

Findings

A DNC solution needs to address the risks of a lack of necessary functionality, circumvention, security, failure, and insufficient monitoring. In 2004, the SEC approved amendments to Rule G‐39 that require broker‐dealers to comply with the Federal Trade Commissions DNC rules. In conjunction, the Municipal Securities Rulemaking Board also issued clear guidance on required DNC compliance. Thus, this topic is of key importance to broker‐dealers and other investment professionals, especially publicly traded firms. In light of current events, control structures within investment firms will become increasingly important even in non‐public companies, and SOX‐like regulations are likely to develop, affecting all types of investment companies. Proactive compliance is essential.

Practical implications

The risk of DNC violations is not insignificant. Failure to comply with the do not call (DNC) rules could also lead to failure to comply with SOX since penalties and fines for violations could easily be overlooked and be material to a company's financial information.

Originality/value

The paper offers detailed explanation of DNC program requirements by an experienced consultant.

Citation

Ruch, L. (2009), "Compliance with Sarbanes‐Oxley and do not call regulations is interdependent when telemarketing is a core part of a sales strategy", Journal of Investment Compliance, Vol. 10 No. 1, pp. 56-60. https://doi.org/10.1108/15285810910948153