The U.S. Securities and Exchange Commission unanimously agreed to eliminate initial public offering quiet periods today, but it battled acrimoniously over mutual fund governance independence requirements once again.

The SEC voted 5-0 in favour of eliminating the quiet period, allowing companies to offer material to investors apart from the prospectus ahead of an IPO. The Securities Industry Association says the move to adopt final rules to update the registration, communications, and offering processes represents a “major milestone” toward ensuring that regulation keeps pace with changing market conditions and the demands of investors and issuers. In January of this year, SIA endorsed the proposed rules and urged their approval.

“The SEC’s action today marked a major milestone in modernizing the securities offering process,” says SIA president Marc Lackritz. “The commission realized the necessity of amending 70-year-old rules so that they reflect the realities of investing and capital raising in the 21st century. These changes will benefit investors and issuers by streamlining the offering process and providing companies with a more efficient way to access capital.”

The changes adopted by the SEC are vital to the liquidity, depth, and efficiency of the U.S. capital markets, Lackritz says. “By modernizing these rules, the commission has made an important contribution to maintaining the global preeminence of the U.S. capital markets.”

However, the commissioners also clashed once again over the proposed rule requiring mutual fund boards to have independent chairs and 75% independent directors. The mutual fund directors rule passed earlier in a contentious three to two vote, with SEC chair William Donaldson voting with Democratic commissioners Harvey Goldschmid and Roel Campos. Republican appointees, Cynthia Glassman and Paul Atkins dissented vigourously. Last week, an appeal court upheld a judicial challenge from the U.S. Chamber of Commerce and sent the rule back to the SEC for further consideration over the costs it may impose and to consider alternatives.

Yet the SEC put the issue straight onto the agenda for outgoing chairman Donaldson’s last commission meeting. He leaves the commission tomorrow. Again, the commissioners engaged in a contentious debate, and the same three to two vote resulted. Atkins called it one of the “saddest days” in the history of the SEC.

Following the vote, the Chamber of Commerce said it will challenge the SEC’s second proposal to create an independent chairman and directors rule for mutual fund companies in the U.S. Court of Appeals.

“The SEC didn’t meet their legal requirements the first time around and today’s effort is no different,” says Chamber president and chief executive officer Thomas Donohue. “It’s outrageous that a regulatory agency would deliberately ignore the orders of a U.S. Court of Appeals and disregard calls for a reasoned rulemaking process.”

It says chairman Donaldson rushed re-adoption of the same rule, without providing an opportunity for public notice or comment, because his term expires this week. “After a seven-day secret process, the SEC has recklessly re-adopted its flawed rule,” says Donohue. “This attempt to circumvent our legal and regulatory process will not stand up in court.”

The Chamber notes that the SEC released a new report, developed over the last few days, using older estimates the agency had previously dismissed as unreliable. The report suggests the costs associated with the mutual fund directors rule would be minimal.

“There is no reason to rely on consultant guesstimates,” says Donohue. “Real data exists from companies which have implemented changes in their boards. An honest rulemaking process would seek the best information possible, not the quickest.”