Fidelity Investments has the support of New Hampshire Senator Judd Gregg (a Republican) in its battle against the Securities and Exchange Commission (SEC) stipulation that mutual fund companies appoint an independent chairman. The rule would unseat Edward C. Johnson III, who has headed family-owned Fidelity since 1972.
“Our views are well known,” Fidelity spokesman Vin Loporchio said in an interview on Friday. “We believe that to enact this rule requiring an independent chairman greatly limits the discretion of the board of directors to exercise their business judgment.”
While some fund companies have had independent chairs on their boards for a number of years, many in the industry still oppose the rule. Ironically, Putnam Investments, the Marsh & McLennan unit that was the most high profile participant in the scandal over improper trading, has had independent chairs for about a decade.
The SEC’s rule comes amid a reform movement of the $7.6 trillion fund industry, which, because of the scandal, has been under perhaps its greatest scrutiny since coming under regulation.
Regulators in Washington and across the country have since pushed for better transparency and accountability in the industry, which manages the savings of about of half of U.S. households.
According to the Center for Responsive Politics, Fidelity’s political action committee was Gregg’s top contributor in the 1999-2004 Senate election cycle, donating almost $26,000 to the senator.
Johnson himself contributed $4,000 to Gregg’s committee between 2001 and this year, according to data from the Federal Election Commission.