Release Date: Jun 29, 2005Contact: 888-249-NEWS
U.S. Chamber Vows to Continue Fight --SEC Mutual Fund Action to be Challenged in Court
WASHINGTON, D.C. – The United States Chamber of Commerce said it will challenge the Securities and Exchange Commission's second proposal to create an independent chairman and directors rule for mutual fund companies in the U.S. Court of Appeals.
"The SEC didn't meet their legal requirements the first time around and today's effort is no different," said Thomas Donohue, Chamber President and CEO. "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."
Last week, the U.S. Court of Appeals for the D.C. Circuit sent back the SEC rule that mutual funds have an independent chairman and that 75 percent of their directors be independent as well. Chairman Donaldson has rushed re-adoption of the same rule, without providing an opportunity for public notice or comment, because his term expires this week.
"After a seven-day secret process, the SEC has recklessly re-adopted its flawed rule," said Donohue. "This attempt to circumvent our legal and regulatory process will not stand up in court."
The SEC released a new report, developed over the last few days, using older estimates that the agency had previously dismissed as unreliable. The report suggests the costs associated with the mutual fund directors rule would be minimal.
"There is no reason to rely on consultant guesstimates," said Donohue. "Real data exists from companies which have implemented changes in their boards. An honest rulemaking process would seek the best information possible, not the quickest."
The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.