SEC Must Try Again on Independence for Mutual Funds

In a 3-0 ruling, the DC Appelate Court agreed that the SEC failed to take into account the costs to the mutual fund industry with proposed rules requiring that the chairman of the board and 75% of directors have no ties to mutual fund management. Chairman Chris Cox accepted the decision, which takes effect in 45 days. The rules were passed while William Donaldson, Cox's predecessor, was still in charge. The rules came in response to late-trading scandals during 2004.

The SEC is going to have to be more creative and thoughtful here--or they will suffer the same fate from the mutual fund industry as Senate Finance Chairman Charles Grassley incurred from Roth CPA Updates blogger Joe Kristan last week.