Although the Securities and Exchange Commission revealed the findings of two cost/benefit studies it commissioned on the proposed independent directors rule late last year, the U.S. Chamber of Commerce sought access to the complete report, including any records supporting the decision to undertake the studies. The SEC decided not to share the information with the U.S. Chamber, a decision it is now appealing.
An SEC staff member issued a letter to the U.S. Chamber saying the records "are protected from disclosure by the deliberative process privilege. This privilege was designed to encourage open, frank discussion on matters of policy between subordinates and superiors."
The Chamber retorted that the information is "non-privileged." Further, it said, "important questions have now been raised about the decision to make the two Office of Economic Analysis papers available in December 2006, and the fact that they were not available sooner."
Just before former SEC Chairman William Donaldson left office, the Commission hastily voted on the governance requirement that 75% of a fund's board, including the chairman, be independent, and passed the measure by a 3-2 vote. The U.S. Chamber appealed the rule twice before the U.S. Court of Appeals for the D.C. Circuit. The Chamber won both times, first, the court said, because the SEC had failed to consider the cost of the measure. In the second ruling, the court determined that the SEC failed to seek public input on its cost.
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