In an effort to further strengthen the effectiveness of mutual fund boards, the Investment Company Institute added two recommendations to its "15 best practices" platform: prohibition of close family members of fund employees, and audit requirements mirroring those set forth for companies by Section 301 of the Sarbanes-Oxley Act.

The ICI suggested that fund companies should implement these practices before any type of regulation by the Securities and Exchange Commission. The mutual fund industry has come under scrutiny for questionable trading tactics, especially from New York Attorney General Eliot Spitzer and his sweeping probe.

The ICI presented its original "15 best practices" in 1999, addressing such issues as what constitutes a majority and what type of former employees should not serve on boards.

ICI Chairman Paul Haaga said of the recent allegations against funds, "The Board is committed to taking whatever actions are needed to forcefully and effectively address these concerns. Everything is on the table to protect mutual fund shareholders."

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