April 2006 Archives
SEC Approves Application of NASD’s Manning Rule to all NASD Members
On April 14, 2006, the SEC approved amendments to NASD Interpretive Material 2110-2, which is known as the "Manning Rule." The amendments clarify that the Manning Rule applies to every NASD member firm, regardless of whether the firm is trading in a market making capacity.
Court of Appeals Vacates SEC Fund Governance
In the latest round of the ongoing saga of Chamber of Commerce v. SEC, the U.S. Court of Appeals for the District of Columbia ruled today to vacate the two conditions of an SEC regulation mandating that both the chairman and 75 percent of the directors of a mutual fund must be independent from management. However, before entering its order, the court gave the SEC 90 days to reopen the rulemaking record for comment on the costs of implementing the two conditions. The SEC was ordered to file a status report with the court within that 90-day period. Presumably, after reviewing the SEC’s report, the court will decide whether to rescind its vacation order, allow it to go into effect, or take some other action. In explaining its decision not to vacate the conditions immediately, the court noted that a "significant portion of the mutual fund industry appears to have come into substantial compliance" with the rules, and that an immediate vacation might risk "substantial disruption to the mutual fund industry because of the resultant inconsistent governance practices that would arise within the industry, which also might sow confusion in the investing public."