MarketWatch columnist Chuck Jaffe has a bone to pick with the Investment Company Institute and the Independent Directors Council, which have just issued a report showing that three-quarters of 88% of fund boards were comprised of independent directors at the end of last year.

The organizations also found that 75% of fund companies either have an independent chairman or a lead independent director. In the mid-1990s, less than 25% of funds had an independent chairman.

The report also found that whereas 66% of fund companies had separate legal counsel for their independent board members in 2000, more than 90% do so now, and a “vast majority” have a financial expert on the audit committee.

“Fund boards have always taken their duties to shareholders very seriously,” said Robert W. Uek, chairman of the Independent Directors Council. “Clearly, fund boards have increased the depth of their oversight as the industry has grown and the issues affecting funds have continued to become more complex. This report indicates that shareholders should be confident that directors are keeping a close watch on their funds.”

Fact is, Jaffe says, because the Securities and Exchange Commission had unsuccessfully passed the independent chairman rule that would have required 75% of funds, including the chairman, to be independent, only to be turned down by a federal appeals court, most fund boards switched to 75% independent “figuring that they would just beat the regulators to the punch,” Jaffe says. “There’s no cause for glad-handling here.”

In fact, Jaffe goes so far as to call independent oversight of fund boards “the bare minimum for what the public should have expected or demanded from a board of directors.

“What you haven’t seen in the last decade is those boards standing up regularly to management practices that are bad for investors. Plenty of boards retain mediocre or lousy managers year after year, push through fee increases or fail to push management to close a fund to new investors after assets surpass the ideal size for the strategy they employ,” Jaffe maintains.

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