ICI Asks SEC To Make Independent-Board Rule More Flexible

The mutual fund industry still doesn’t like the Securities and Exchange Commission’s plans to make fund boards more independent. With the comment period on the agency’s rule requiring three-quarters of fund trustees to be independent of the fund management firm, including chairmen, expiring on Monday, the Investment Company Institute asked the SEC to consider a more flexible rule, eliminating the independent-chair requirement and reducing the number of required independent directors to two-thirds of the board. In its comment letter, the ICI argued that there is no evidence that having independent chairmen benefits investors, and that a 75% requirement could put smaller fund boards in danger of noncompliance if only one independent director resigns. Meanwhile, the group’s small funds committee complained that the requirement has forced some funds to double director pay and cause “substantial increases” in legal fees. A federal appeals court tossed the rule in April, but gave the SEC time to collect comments on its costs.