Congressman Michael Oxley (Ohio), chair of the House Financial Services Committee, presented William Donaldson, SEC chairman, with clear cut evidence supporting the SEC's independent director rule proposal in a letter sent on May 20.

16 of the 19 firms named in trading scandals had an affiliated chairman while funds were engaged in abusive trading, Oxley pointed out. But the congressman's point goes deeper: he separates bank-based fund groups, which are required by the Glass-Steagal Act.to have independent chairman, and non-bank-based fund groups.

Splitting the funds along those lines reveals that all 14 non-bank-based fund groups had an affiliated chairman while illegal trading activity was taking place. In fact, Putnam was the only fund family that had an unaffiliated chairman at any point in the relevant period (they also had an affiliated chairman).

Oxley believes the SEC's proposal "would eradicate the self-dealing by interested, management-affiliated chairmen and its harmful effects on mutual fund shareholders. I urge the Commission to adopt, without amendment, the proposed rule."

“These two jobs simply can’t be performed effectively by the same person," said Oxley in a separate press release. “The dual role creates too many opportunities for self-dealing for both personal and business gain.”

In a press release, Oxley cited a specific, well-known example: "[Strong is] the poster child for why we need independent chairmen." 

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