In court documents filed last week with the District of Columbia US Circuit Court of Appeals, the Securities and Exchange Commission asked the court to dismiss a lawsuit brought by the US Chamber of Commerce over an SEC requirement that all US mutual funds must appoint an independent chairman.
Although the Chamber sought to challenge the new rule, set to come into force in 2006, on the grounds that 30 of its member firms are mutual fund advisers, the SEC reportedly argued that the business body has failed to demonstrate that its members have been, or will be, hurt by the new requirement.
The securities regulator stressed that the regulation, which also requires 75% of a fund's directors to be independent of the company, is necessary in order to protect investors from "huge losses" caused by corporate governance lapses in fund firms.
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