FINRA Series 7Seeks Business for the Broker-DealerHard
A representative wants to cold call a former client whose last securities transaction with the firm occurred 20 months ago. Under the established business relationship exemption to the Do-Not-Call rules, this call:
- AIs exempt because any prior client relationship never expires
- BIs not exempt because former clients can never be called under any circumstances
- CIs not exempt because the established business relationship exemption expires 18 months after the last transaction
- DIs exempt as long as the client's account remains open, regardless of transaction date
Show answer & explanationAnswer & explanation
Correct answer: C. Is not exempt because the established business relationship exemption expires 18 months after the last transaction
The established business relationship (EBR) exemption to Do-Not-Call rules generally lasts 18 months from the customer's last purchase, transaction, or payment. Since 20 months have passed, the exemption has lapsed, and the rep must check the National Do-Not-Call Registry before calling.
Why the other options are wrong
- A. EBR exemptions expire after set time periods, they are not permanent.
- B. Former clients can be called if within the EBR window or if not on the Registry; a blanket ban is incorrect.
- D. Merely having an open account without recent transactions does not preserve the 18-month EBR exemption.
Established Business Relationship (EBR) Exemption
An exemption to Do-Not-Call rules allowing firms to call existing/former customers for 18 months after the last transaction, or 3 months after an inquiry/application, without checking the Registry.
- Transaction-based EBR lasts 18 months.
- Inquiry/application-based EBR lasts only 3 months.
- Exemption expires; after expiration, the Registry must be checked before calling.
Memory trick: 18 months for a sale, 3 months for a question — after that, check the Registry's list.