NASD Alert: Call Center Abuse
Editor's Note: The following is an investor alert from NASD originally posted on March 16. It is being republished here with their permission as a service to TheStreet.com's readers.
Some securities firms use call centers to provide support for a variety of administrative and customer service issues. Some firms, especially discount brokers, utilize call centers to accommodate self-directed investors. Generally, such call centers respond to incoming calls initiated by the investor. In most cases, the individuals who staff these call centers don't call you, don't recommend specific investments and in many cases don't receive commissions or other transaction-based compensation for selling investment products.
This Investor Alert focuses on a different, and relatively new, type of call center -- the customer advisory center. It is a center that is staffed by securities professionals who may provide financial planning services, sell securities products and receive commissions or other financial incentives for doing so. These new, sales-orientated centers are becoming more prevalent, and you may not be familiar with how they work. Before you deal with this new type of call center, be sure you understand its operations.
Some of these sales-oriented centers are characterized by:
Potential ProblemsIn a recent Enforcement Action against Merrill Lynch (MER), NASD identified a number of problems and rule violations associated with one of these new customer advisory centers:
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