Chamber of Commerce v. SEC

Case Updates

The D.C. Circuit ruled in favor of the Chamber, holding that the SEC failed to allow public input on its proposed rules governing mutual fund boards of directors. The court allowed the SEC 90 days to reconsider the rule and instructed the agency to take into consideration public comments.

The U.S. Chamber challenged the Securities and Exchange Commission’s mutual fund corporate governance rule in both the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the D.C. Circuit. The rule required mutual funds to ensure that board chairmen were not affiliated with respective firms. The rule also required 75 percent of the directors on any board to be independent. The SEC rule was vacated by the D.C. Circuit, but the SEC hastily re-promulgated the rule without undertaking a rigorous review of costs and alternatives as ordered by the court. NCLC argued that the SEC intruded on the D.C. Circuit's jurisdiction when it reissued the rule before the court had issued its mandate returning the matter to the SEC.