Reuters: Regulatory News: UPDATE 1-U.S. trade groups sue CFTC over mutual fund rule

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UPDATE 1-U.S. trade groups sue CFTC over mutual fund rule Apr 17th 2012, 16:39 Tue Apr 17, 2012 12:39pm EDT WASHINGTON, April 17 (Reuters) - Business groups filed a lawsuit on Tuesday against the U.S. Commodity Futures Trading Commission, challenging a recent rule requiring mutual funds to register with the agency. The Investment Company Institute and the U.S. Chamber of Commerce complained that the rule duplicates a requirement that funds register with the Securities and Exchange Commission. The complaint, filed in U.S. District Court for the District of Columbia, alleges that the CFTC did not properly weigh the costs and benefits of the rule before it was finalized in February. "The new rule creates confusion, not clarity, by subjecting mutual funds to redundant, overlapping, and unnecessary regulatory requirements," David Hirschmann, head of the chamber's Center for Capital Markets Competitiveness, said in a statement. "The CFTC completely ignored its statutory duty to evaluate the costs this unnecessary regulation will undoubtedly impose on the economy." The Investment Company Institute, a mutual fund industry trade group, warned the rule would cost investors. "The rule will impose significant compliance costs on mutual fund advisers and, ultimately, these costs will come out of shareholders' pockets," ICI President Paul Schott Stevens said in a release. A CFTC spokesman had no immediate comment. The chamber and other industry groups are playing an aggressive role in challenging financial regulations issued in the aftermath of the 2007-2009 financial crisis. The groups' main line of attack has been that regulators are not following requirements that they do thorough cost-benefit analyses before issuing final rules. In the first successful challenge to a rule linked to the 2010 Dodd-Frank financial oversight law, a federal appeals court last July struck down the SEC's "proxy access" rule that would have made it easier for shareholders to nominate directors to corporate boards. The CFTC is also facing a legal challenge from the Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association (ISDA) over a rule intended to curb speculation in commodities markets. Link this Share this Digg this Email Reprints

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