U.S. Court of Appeals for the D.C. Circuit

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D.C. Circuit addresses SEC mutual fund independent chair and 75% independent director rule

April 07, 2006

The D.C. Circuit ruled in favor of the Chamber, holding that the SEC failed to allow public input on its proposed rules governing mutual fund boards of directors. The court allowed the SEC 90 days to reconsider the rule and instructed the agency to take into consideration public comments.

U.S. Chamber files lawsuit

September 21, 2005

The U.S. Chamber challenged the Securities and Exchange Commission’s mutual fund corporate governance rule in both the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the D.C. Circuit. The rule required mutual funds to ensure that board chairmen were not affiliated with respective firms. The rule also required 75 percent of the directors on any board to be independent. The SEC rule was vacated by the D.C. Circuit, but the SEC hastily re-promulgated the rule without undertaking a rigorous review of costs and alternatives as ordered by the court. NCLC argued that the SEC intruded on the D.C. Circuit's jurisdiction when it reissued the rule before the court had issued its mandate returning the matter to the SEC.

Complaints in the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the DC Circuit filed 9/2/04. SEC motion to transfer the rulemaking challenge to the DC Circuit filed 9/9/04. Chamber’s request for stay denied by SEC 9/9/04. Chamber’s statement in response to defendant’s motion to transfer filed 9/20/04. Chamber's reply in support of emergency motion for stay, or, alternatively, for expedited briefing by petitioner filed 10/7/04. Chamber’s opening brief filed 12/13/04. Chamber’s request for stay of conditions to reliance upon certain exemptive rules under the Investment Co. Act denied 1/13/05. Chamber’s reply brief filed 1/26/05. Chamber’s statement in response to SEC's motion to consider its response to standing filed 2/24/05. Chamber’s opposition to CFA Institute’s motion for leave to file amicus brief filed 3/1/05. Moot court held 4/11/05. Oral argument held 4/15/05. Decided 6/21/05. SEC reissued rule 6/29/05. Renewed petition for review filed 7/7/05. Petition for rehearing filed 7/28/05. Motion for stay filed 8/5/05. Stay granted 8/10/05. Petition for rehearing denied 9/13/05. Opening brief filed 9/21/05. Reply brief filed 11/7/05. Oral argument held 1/6/06. Decided 4/7/06.

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