In a letter to SEC Chairman William Donaldson, Rep. Michael Oxley (R-Ohio) reiterated his call for independent chairman of the boards at fund companies by noting that 85% of the chairman at companies embroiled in the scandal worked at the investment advisory firm. Of the 19 companies implicated in the scandal so far, 16 had such chairmen at the time the trading abuses occurred, proving, Oxley said, they are not able to serve in a disinterested way. Oxley characterized these findings as "startling."
Serving the management company and shareholders are "two jobs [that] simply can't be performed effectively by the same person," Oxley said. "The dual role creates too many opportunities for self-dealing for both personal and business gain."
Calling Strong Capital Management founder Richard Strong "the poster child for why we need independent chairmen," Oxley urged Donaldson to pass its proposed rule requiring 75% of a funds board to be independent, including the chairman a requirement many in the industry are fiercely opposed to.