Eugene Scalia, one of the lead attorneys representing the U.S. Chamber, said, "These provisions exceed the Commission's authority," noting in a press briefing last Friday, "The Securities and Exchange Commission doesn't really have the authority to regulate corporate governance practices."
But SEC spokesman Matthew Well countered: "This is a critical component of helping to ensure good corporate governance in mutual funds."
As to the odds in the case, Fund Democracy's Mercer Bullard believes "there's a 50-50 chance the SEC will lose," but even if it's the commerce group that loses, it will at least have made "a strong political statement."
"Now you have the Chamber of Commerce waging a political battle to put the fear of God into the SEC," he continued.
The SEC passed the independent board director rule in a split vote, with Chairman William Donaldson, a Republican, siding with Democrats Harvey Goldschmidt and Roel Campos to pass the measure, which takes place Jan. 16, 2006. The other two commissioners, Republicans Paul Atkins and Cynthia Glassman, voted it down.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.