The rule, issued in 2004, requires that the chairmen of mutual fund boards, as well as 75% of a board’s directors, are to have no direct ties to the company that manages the fund’s assets (See SEC to Add More Detail to Independent Fund Director Rule ).
Last year the National Chamber Litigation Center challenged the SEC in court, saying that the SEC considered materials on which the public was not given the opportunity to comment and that the SEC ignored instructions from the US Court of Appeals for the District of Columbia to consider a disclosure alternative to the independent chair provision. A federal appellate court ruled for the business group in April 2006, giving the SEC 90 days to consider public comment (See Business Groups Win Second Fund Director Independence Rule Challenge ).
In conjunction with the request for comment, the SEC also filed a status report with the court informing it of the request for comments on costs, as well as any issue related to the underlying purpose of the requirements, according to an alert from Thompson.com.
Separately, SEC Chairman Christopher Cox has asked the SEC’s general counsel to conduct a top-to-bottom review of the process for complying with the laws that require an economic analysis of rule proposals.
The full text of the SEC’s request is here and will allow submission of comments.
For more information, contact Vincent Meehan, Staff Attorney, or Penelope Saltzman, Branch Chief, Office of Regulatory Policy, (202) 551-6792, Division of Investment Management, Securities and Exchange Commission, 100 F Street, NE , Washington, DC 20549.