SEC Again Adopts Mutual Fund Governance Rule

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Originally uploaded by governancefocus.

One week after being overturned by a federal appeals court, the Securities and Exchange Commission has again passed a rule requiring mutual fund boards to have more independent directors.

The rule and its progeny are being hotly contested by the U.S. Chamber of Commerce, which says the SEC's foray into corporate governance is unlawful, unwarranted and unwanted.

"The SEC didn't meet their legal requirements the first time around and today's effort is no different," chamber president and CEO Thomas Donohue said in a statement. "It's outrageous that a regulatory agency would deliberately ignore the orders of a U.S. court of appeals and disregard calls for a reasoned rulemaking process."

The chamber originally challenged the SEC's rule, which requires that mutual fund boards have an independent chairman and be composed of at least 75 percent independent directors if they want to engage in certain transactions under the Investment Advisors Act.

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