A controversial new rule from the Securities and Exchange Commission is under attack by the U.S. Chamber of Commerce, which filed an emergency motion Monday in the U.S. Court of Appeals for the D.C. Circuit.
The Chamber of Commerce, which represents U.S. businesses, is looking to protect the interests of mutual fund companies who will be required to ensure that 75 percent of company directors, including the chairman, be independent of the fund company beginning in 2006, the Associated Press reported.
The Chamber of Commerce requested a court ruling by Oct. 18 that would stay the SEC rule until legal challenges are resolved. If the court won't rule in favor of that motion, the Chamber seeks an expedited hearing on the matter, the AP reported.
The rule, which seeks to promote greater independence for fund company board members, was passed this summer by the SEC in a split 3-2 vote. The Chamber of Commerce unsuccessfully challenged the rule in a lawsuit that sought, among other things, to require the SEC to defer implementation of the rule pending the outcome of the lawsuit.
Mutual fund firms including Fidelity Investments and the Vanguard Group have boards chaired by fund-company executives and both firms oppose the rule, the AP reported. Calling the SEC rule an “an illegitimate federal regulation,” the Chamber of Commerce believes that the rule will force regime changes at thousands of fund companies, which will incur huge expenses as a result.
In response Monday, SEC spokesman John Nester referred to a Sept. 2 statement from the agency's general counsel, Giovanni Prezioso, that the agency "carefully complied with its legal obligations in adopting these rules and we expect to defend them vigorously in court," the AP reported.