The D.C. Circuit issued an opinion in Chamber of Commerce of the U.S.A. v. Securities & Exchange Comm'n, which involves the Chamber's challenge to a rule promulgated by the SEC. The rule requires that certain mutual funds adopt specified governance practices, including those set forth in two conditions: a fund must have (1) a board with no less than 75% independent directors and (2) an independent chair.
When this case was last before the D.C. Circuit, it held that the Chamber had standing to challenge the SEC's rule, that the SEC had the authority to promulgate the rule, and that the SEC had erred by failing to determine the costs of the two conditions and failing to address a proposed alternative to the independent chair condition. The court remanded the case to the SEC.
On remand, the SEC declined to modify the two conditions. The Chamber again appealed. The D.C. Circuit again reversed and remanded to the SEC, holding that the SEC erred by relying on materials not in the rulemaking record without affording an opportunity for public comment.
Will the SEC ever get this one right?
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