Stocks Newsroom

Before Investing You Should Always Get Answers To The Questions Below And Written Information About The Investment

The telephone rings as you're sitting down to dinner, relaxing with family or friends, or putting the kids to bed. A stranger is selling something.  is there help or trouble on the line?

It's known as “cold calling.” For many businesses, including securities firms, cold calling serves as a legitimate way to reach potential customers. But sometimes serious trouble and financial losses await you at the other end of the line. Dishonest brokers may pressure you to buy a bad investment. Or the investment might be 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. But you need to take steps to take advantage of these rules and to protect yourself.

This brochure tells you about your legal rights, how to deal with cold calls, how to stop them, and how to evaluate any investment opportunity that comes your way over the telephone.

Cold Callers Must Follow These Rules

When people from the securities industry call to sell you something, they must:
Call Only 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 them permission to call you at other times. Cold callers may call you at work at any time.

Say Who's Calling and Why
Cold callers must promptly tell you  their name, their firm's name, address, and telephone number, and that the purpose of the call is to sell you an investment.

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. Further below, you'll find information on how to make a complaint.

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. If you do 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.

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.

What Are Signs Of Trouble?

Honest brokers use cold calling to find clients for the long term. They ask questions to understand your financial situation and investment goals before recommending that you buy anything. While you may find their cold calls annoying, honest brokers who follow the cold calling rules are acting within their rights.

Dishonest brokers use cold calling to find “quick hits.” Some set up “boiler rooms” where high-pressure salespeople use banks of telephones to call as many potential investors as possible. These strangers will hound you to buy stocks in small, unknown companies that are highly risky, or sometimes, part of a scam.