Particularly in light of the fact that so much time has passed since the Securities and Exchange Commission’s Aug. 21 deadline for comments on the independent chairman rule, Washington insiders are now speculating that the SEC will probably drop the issue, sister publication Securities Industry News reports.
Of the three options the SEC now faces—adopting the rule as written, amending it or abandoning the issue altogether—many believe the SEC will walk away from the rule.
“It will be way easier for [SEC Chairman Christopher] Cox to let this die than getting any compromise in place, because [SEC Commissioner] Paul Atkins is going to the mat on this,” said one former SEC official.
But some believe that should the SEC vacate the rule, it would be doing a grave disservice to investors. “The SEC is neglecting its foremost mission to protect investors by letting this rule die,” said Jacob Zamansky, a principal with Zamansky & Associates. “The mutual fund scandal is a prime area of abuse that the SEC is just turning a blind eye to.”
And in a comment letter to the SEC on June 15, 2004, all seven living former chairmen of the SEC endorsed the independent chairman rule, writing, “An independent mutual fund board chairman would provide necessary support and direction for independent fund directors in fulfilling their duties by setting the board’s agenda, controlling the conduct of meetings and enhancing meaningful dialogue with the advisor.”