June 23, 2005

CRAPO CALLS FOR CONTROVERSIAL SEC VOTE DEFERRAL

Current chairman called for vote after court rejection

Washington, DC â?? Idaho Senator Mike Crapo and seven other Senators have asked the Securities and Exchange Commission (SEC) to defer final action on the mutual fund independent chairman rule until a new SEC chairman is on board. Wednesday current and outgoing Chairman William Donaldson called for a vote on the issue just one day before he ends his term in office. President Bush has nominated California Representative Chris Cox to succeed Donaldson; Coxâ??s nomination is pending.In the letter delivered today and co-signed by seven other Senators, Crapo wrote, â??It is tradition that an outgoing chairman not finalize pending controversial matters immediately before his or her successor takes office. Moreover, it would seem inappropriate and contrary to the Administrative Procedures Act for the Commission to undertake, and complete, a complex regulatory finding, circulate it among the commissioners, engage in a full and thorough debate, and move it to final vote in just one week.â??The co-signers on the letter are all members of the Senate Banking Committee and include Jim Bunning (R-Kentucky), Robert Bennett (R-Utah), Mike Enzi (R-Wyoming), Chuck Hagel (R-Nebraska), Mel Martinez (R-Florida), Rick Santorum (R-Pennsylvania) and John Sununu (R-New Hampshire). A copy of the letter accompanies this news release.Last year, the SEC passed a rule that required the chairman and 75 percent of most mutual fund boards to be independent of fund managers. The U.S. Court of Appeals for the D.C. Circuit found that the rule violated the Administrative Procedure Act because it didnâ??t adequately consider what the rule would cost. The Court also found that the SEC had rejected an alternative proposal from two of its commissioners.***June 22, 2005 The Honorable William H. Donaldson Chairman United States Securities and Exchange Commission 450 Fifth Street NW Washington, DC 20549 Dear Chairman Donaldson and Members of the Commission: We are writing about yesterday's ruling by the U.S. Court of Appeals for the D.C. Circuit directing the Securities and Exchange Commission (SEC) to reconsider rules passed in June 2004 requiring the chairman and 75 percent of most mutual fund boards to be independent of fund managers. In a unanimous decision, the three-judge panel found that the SEC violated the Administrative Procedure Act by failing adequately to consider the costs of the rule. The Court also found that the Agency improperly rejected an alternative proposal from two of its commissioners. As you know, it is tradition that an outgoing chairman not finalize pending controversial matters immediately before his or her successor takes office. Moreover, it would seem inappropriate and contrary to the Administrative Procedures Act for the Commission to undertake, and complete, a complex regulatory finding, circulate it among the commissioners, engage in a full and thorough debate, and move it to final vote in just one week. Accordingly, we are asking that the Commission defer final action on this controversial and complex matter until the Commission's new chairman is in office and the full Commission can make a deliberate decision.