April 08, 2006

A long time ago, the forgettable SEC Chairman Bill Donaldson launched a rule requiring mutual funds to have independent directors. Thanks to the US Chamber of Commerce's suit, the SEC has twice had to defend its procedures in adopting the rule in the DC Circuit. Yesterday the court struck down the rule for the second time and again sent the Commission back for justification. The whole thing, which is discussed here, is a fitting tribute to the Donaldson era.