|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
SEC To Defend Independent Fund Chair Rule
Staff Writer
CBS Marketwatch. December 1, 2004
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EXCERPT: One of the most hotly-contested reforms in the wake of the mutual fund trading scandals is pitting the Securities and Exchange Commission against the U.S. Chamber of Commerce as well as federal lawmakers. In early September the Chamber of Commerce filed a lawsuit against the SEC seeking to overturn a rule requiring funds' boards of directors to have independent chairmen. The case is set to open April 15, according to an order from the U.S. Court of Appeals for the DC District Court released Tuesday, Dow Jones Newswires reported. The rule, which requires that 75 percent of a fund's board and its chair to be unaffiliated with fund management, was adopted by the SEC in June by a 3-2 vote. "The SEC has over-reached its authority, resulting in a rule that is bad for investors and contrary to the intent of Congress," said Stephen A. Bokat, executive VP for the National Chamber Litigation Center, the public policy legal arm of the Chamber of Commerce. The Investment Company Act of 1940 mandates that only 40 percent of fund board directors should be independent. Large fund families like Fidelity Investments and the Vanguard Group opposed the independent chair rule because they said the costs would outweigh any potential benefits, said Sam Campbell, an analyst at Financial Research Corp. SEC chief attorney Giovanni Prezioso said that the commission "carefully complied" with the law in adopting the rules, which affects companies nationwide. "We expect to defend them vigorously in court," he added. Aside from the Chamber of Commerce lawsuit, the SEC's independent fund chair rule is also feeling heat from Washington lawmakers. |
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