While the Securities and Exchange Commission has conceded defeat in its attempts to force fund boards to have an independent chair (www.fundaction.com, 8/25), the agency is looking at ways to keep important parts of the independent chair rule, according to people familiar with exchanges between agency insiders. Details were unclear at press time, but FA was told that a compromise would see the SEC adopt one part of the original rule, the 75 % independent directors requirement.
Last week, as the SEC elevated the importance of the rule by putting it on the crowded agenda of its final year-end meeting, there were strong hints from insiders that the SEC is close to taking action, though how a decision might be reached is still uncertain. An SEC spokesman declined to comment.
The Investment Company Institute has pointed out that there is a big difference between a board that is two-thirds independent--as most are--and one that is 75 % independent. In the latter case, one independent director resigning would force the removal of two put there by management.