Both the U.S. Chamber of Commerce and Investment Company Institute called on the SEC to conduct a thorough review of its mutual fund governance rule and to effectively postpone plans to revote on the rule on Wednesday.
The chamber said the SEC risks further legal action on the rule should it adopt the rule in the vote. A chamber spokeswoman said the chamber would likely pursue legal action if the SEC adopts the rule.
A June 21 U.S. Court of Appeals decision directed the SEC to address deficiencies in the rule, including the requirement that all mutual funds boards comprise 75% independent directors and also have an independent chairman.
The court cited the SEC for failing to consider the costs mutual funds would incur to comply with the rule and failing to adequately consider a proposed alternative to the independent chairman condition.
In a letter today to the SEC's five commissioners, Eugene Scalia, counsel for the chamber, wrote: "The chamber trusts that the commission will now engage in a thorough, rigorous and deliberative process to comply with the court's order ... By contrast, for the agency to rush to judgment ... would cause the public, and the court of appeals, to conclude that the commission's decision was pre-ordained. Such a course would subject the commission to yet further legal proceedings in which it is unlikely to prevail."
The ICI called on the SEC to seek public comment in reconsidering the rule.
Elizabeth R. Krentzman, ICI general counsel, wrote in the letter to the five commissioners: "We recommend that the commission invite additional public comment and collect additional data to assure a thoughtful and deliberative process."
The "evaluation of these costs is a complex undertaking, and total compliance cost may be substantial," wrote Ms. Krentzman. "We urge the commission to make a complete and detailed analysis of these costs."
Ms. Krentzman's letter urges the commission to evaluate alternatives to the independent chairman requirement, such as outlined by the court.
SEC officials had no comment, said John D. Heine, SEC spokesman.
