Investor Advocates Seek Suit Dismissal

The investor advocacy groups Fund Democracy and Consumer Federation of America are seeking the dismissal of a controversial new fund governance rule that's mired in the U.S. Court of Appeals process.

The U.S. Chamber of Commerce is suing the Securities and Exchange Commission over the independent chairman rule, which says the chairman of a fund's board of directors must be independent form the firm. Three quarters of the board's members must also be independent, the rule says. But the chamber doesn't like how former SEC Chairman William H. Donaldson pushed the rule through in the eleventh hour of his tenure, nor does it think the rationale behind the rule is adequate. The latter point of whether the Commission fully considered the costs of the rule and its alternatives is being argued before the court.