The $6.3 trillion dollar fund industry has come under increased scrutiny after a steady three years of stock market declines and corporate scandals such as WorldCom, Enron and Global Crossing have rattled investor confidence to levels not previously seen, Reuters reports.

These issues, and many more will surely be discussed as the General Membership Meeting of the Investment Company Institute kicks off Thursday morning in Washington.

Geoff Bobroff, a fund consultant based out of East Greenwich, R.I., told Reuters, "The mutual fund industry is under siege." Bobroff later indicated that there were no clear signs of it letting up.

More questions surely to be raised concern the so-called independent directors of funds, who some critics assert have connections too close to executives running the portfolios. Some have said that in reality their role should be to watch out for interests of the 95 million mutual fund investors in the U.S.

Stories of corruption in other areas of the financial services industry have undoubtedly had an effect on the level of proposed scrutiny towards the funds industry. With analyst scandals, misallocation of funds and outright illegal activity, regulators have heightened their oversight of mutual funds, which the industry has repeatedly insisted is unwarranted.

Another topic of the forthcoming meeting will pertain to hedge funds. At the recent hedge fund hearings in Washington, there has been talk of allowing mutual funds to employ some tactics used by hedge funds. One such example would be the ability to sell short, or lift restrictions on using borrowed money to fuel returns.

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