Should agency consider information is not part of rulemaking

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Reference no: EM131470403

Question: Rulemaking. The Investment Company Act of 1940 prohibits a mutual fund from engaging in certain transactions in which there may be a conflict of interest between the manager of the fund and its shareholders. Under rules issued by the Securities and Exchange Commission (SEC), however, a fund that meets certain conditions may engage in an otherwise prohibited transaction. In June 2004, the SEC added two new conditions. A year later, the SEC reconsidered the new conditions in terms of the costs that they would impose on the funds. Within eight days, and without asking for public input, the SEC readopted the conditions.

The Chamber of Commerce of the United States-which is both a mutual fund shareholder and an association with mutual fund managers among its members-asked the U.S. Court of Appeals for the Second Circuit to review the new rules. The Chamber charged, in part, that in readopting the rules, the SEC relied on materials not in the "rulemaking record" without providing an opportunity for public comment. The SEC countered that the information was otherwise "publicly available." In adopting a rule, should an agency consider information that is not part of the rulemaking record? Why or why not? [Chamber of Commerce of the United States v. Securities and Exchange Commission, 443 F.3d 890 (D.C.Cir. 2006)]

Reference no: EM131470403

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