Kickback scandal raises issue of independent boards

Just about as soon as news hit that the SEC was looking into the third-party firm kickbacks, the cries for independent boards resurfaced with a vengeance. Recall that fund activists had used previous scandals to push a rule that chairmen and three quarters of all directors be independent. The SEC supported the idea early on. However, that support abated after two court challenges effectively put the rule on hold. You could rightly argue that any scandal will lead to renewed cries for more independence. At the same time, the fact is that there just aren't that many qualified, truly independent board possibilities out there. What would be worse is to appoint someone that appears independent but really isn't. Still, one would hope that fund boards do the right thing, law or not, if at all possible.

For more on this:
- Here's an article from Investment News