SEC to Vote on Fund Independence Rule

Following a decision by a federal appellate court that overturned a Securities and Exchange Commission ruling that required at least 75 percent of mutual fund directors to be independent of the fund company, the commission said that it would vote on the matter June 29. The SEC adopted the rule roughly a year ago, when the $7 trillion mutual fund industry was embroiled in a series of late-trading scandals. The SEC mandate required that the fund board chairman and three quarters of fund directors have no direct ties to the manager of the respective fund. The court ruled that the regulator had the authority to adopt the rule; however, it maintained that the commission had not considered any alternatives and did not consider the costs of such a rule. Under that mandate, it was estimated that roughly 3,700 funds would have to seek new chairmen. Prior to next week's vote, the SEC would have to perform more extensive studies on the costs of compliance with the rule.