Seeking Business: Prospecting, Licensing, and the Solicitation Rules
Where business comes from
Prospects reach a DPP representative through cold calls, seminars, referrals, websites, and social media. Each channel carries a rule. Telemarketing is governed by firm written supervisory procedures, FINRA Rule 3230, and the TCPA: calls only between 8:00 a.m. and 9:00 p.m. local time at the prospect's location, no calls to numbers on the National Do-Not-Call Registry or the firm's internal DNC list without prior express written consent, and no abusive or repetitive calling. Any script or seminar deck is a retail communication under FINRA Rule 2210; it needs principal approval before use, and retail communications for DPPs must be filed with FINRA's Advertising Regulation Department within 10 business days of first use.
The second gate is licensing. You may not solicit a resident of a state where you are not registered, and the offering itself must be registered or exempt there - the security's blue-sky status and your own registration are separate questions, and questions love to blend them.
Private placements add a third gate. Under Rule 506(b) an issuer may sell to unlimited accredited investors plus no more than 35 non-accredited but sophisticated purchasers, but may not use general solicitation or advertising. A website, a tweet, a newspaper ad, or a cold call to someone with no pre-existing substantive relationship is general solicitation. Rule 506(c) permits general solicitation, but then every purchaser must be accredited and the issuer must take reasonable steps to verify that status.
Trap: A scenario describing a 506(b) deal promoted on the firm's public website to accredited investors. Accredited status does not cure the advertising.
Rule of thumb: No relationship before the offering, no 506(b) solicitation - regardless of how wealthy the prospect is.