SEC Seeks Comment on Governance Rules Cost

The Securities and Exchange Commission is inviting public comment on the cost of mutual-fund governance rules set aside by a U.S. court in April, a move that leaves open the possibility of reviving or revising them.

The agency will accept comment until Aug. 21 on the cost question and on “any issue related to the underlying purpose” of the rules, the SEC said in a statement Tuesday.

The rules would require that the chairman and three-quarters of the directors of mutual funds be independent from management. They were adopted under former SEC Chairman William H. Donaldson.

The U.S. Chamber of Commerce successfully challenged the requirements in a lawsuit. On April 7, a U.S. appeals court said the SEC had not followed its own procedures in adopting the rules. The court gave the agency 90 days to correct its process, or the rules would die.

The five-member commission voted unanimously to solicit the new round of comment, the SEC said. Maintaining consensus on the issue will be a challenge, because commissioners are split on whether to kill or keep the rule.

“I have every confidence that the process we are announcing today will result in mutual fund governance that both protects investors and promotes their interests,” SEC Chairman Christopher Cox said.

In a report to the court, the SEC said it would rely on the public comments to decide whether to pass rules “identical to, similar to or different” from the ones struck down April 7.