As the fund scandal continues to spread, many investors and industry leaders are pointing to the directors of the funds themselves as one of the main reasons for these problems, and are coming up with ways to make directors more effective, Dow Jones Newswires reports.

One solution that makes sense is a more democratic method of selecting fund directors. Instead of allowing management or fellow board members to select a director, shareholders themselves should have the opportunity to select candidates – and may soon get that priviledge.

"As far as corporate governance goes, mutual funds are in the Dark Ages," Mercer Bullard, a University of Mississippi law professor and head of investor advocacy group Fund Democracy, told Dow Jones.

Some are even suggesting that directors shouldn’t oversee huge numbers of funds simultaneously. For instance, Fidelity Investments has one board overseeing 277 funds.

And the lack of actual independence among independent fund boards is another shortcoming in the mutual fund industry right now. A new law being kicked around Congress would lower the percentage of interested parties allowed on a fund board from 60% to 33%.

Still, that’s not all. Critics argue that highly paid fund directors, because of their salaries, sometimes make decisions on fees that don’t hurt them as much as regular shareholders.

The Securities and Exchange Commission is currently looking at these and other solutions, and a change to the industry seems imminent.

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