Taping Rule
Whether the firm has discovered that it is subject to the taping rule by itself or been informed by the MSRB or some other regulatory authority, the broker-dealer has 60 days to establish and implement the special supervisory procedures.
The special supervisory procedures require the tape-recording of all telephone conversations between the firm’s registered persons and existing and potential customers. A member firm must also establish reasonable procedures for reviewing the tape recordings to ensure regulatory compliance. The firm must maintain these special procedures for a minimum of three years once they have been implemented.
In addition, each tape recording must be retained for not less than three years from the date the tape was created, and in an easily accessible place for the first two years. Within thirty days of the end of each calendar quarter, the member firm must submit a report on the member firm’s supervision of the telemarketing activities to the applicable regulatory authority.
The maximum allowable number of registered representatives previously employed by a disciplined firm before the taping rule is required to take effect depends on the member firm’s size: 40% if it employs fewer than ten registered personnel