Cold Calling Rules & Warnings from the SEC

Cold Calling Rules & Warnings from the SEC

If you are getting sales leads in order to call prospective investors for a private offering, you need to be aware of the cold calling rules and warnings published by the SEC.  Calling accredited investors can be an extremely effective way to generate interest in your private placement and to raise capital.  It does, however, come with risks because you need to follow the rules in order to avoid a fine.

Before you start dialing make sure that your list has been scrubbed against the National Do Not Call Registry. This is an important first step and some dialing programs will do this for you and connect the call upon a live answer.  If you are manually dialing make sure that you buy your sales leads from someone that scrubs them for you or create an account to check the DNC list yourself.

Here are additional cold calling rules you need to follow.

  • Call hours.  Only call between the hours of 8:00 AM and 9:00 PM.  Make sure that if you are calling in a different time zone that you don’t accidentally call outside of their hours.
  • Introduce yourself.  As soon as someone answers you need to give them your name, why you are calling, what company you are with, and either your address or telephone number.  The last part only applies if you are selling an investment.
  • Be truthful.  This goes without saying, but it is important that you are 100 percent truthful with your sales pitch.  Make sure it is in line with any offering documents that have been prepared.

If someone asks to be removed from your call list, you must comply immediately and make sure they are not called back.  It is important to have some sort of tracking system, especially if you have a team of people making calls.  Once someone asks to be removed you could be fined for calling back.

If an investor is excited and wants to participate in your private offering – great news!  Just make sure that they sign a written agreement before you take any funds.  You cannot obtain their bank account information over the phone and complete the transaction unless they have already given you written permission to complete the transaction and withdraw money from their bank account.

It is essential that, as a sales person, you comply with these cold calling rules.  Otherwise, you could put yourself at risk to have complaints filed with the SEC and FINRA.  This could have a negative consequence on your ability to raise money along with your overall reputation.

It is also important that when you are making calls to investors, you are calling accredited investors.  You are not allowed to solicit or advertise to non-accredited investors.  You can avoid this by purchasing your list from salesleads.tv .  That way you are assured to have a solid list of prospective investors to call.

As you start reaching out to investors use a tracking system.  There are several software programs available and at minimum you can use an excel spreadsheet or upload a shared spreadsheet to Google docs.  You can effectively raise money for your private offering.  Follow the cold calling rules when you do.

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