Representatives of the mutual fund industry are moving quietly in Massachusetts to enact a law which would help define what makes a mutual fund director independent, an increasingly contentious issue.

The legislative proposal was sparked by a decision last year in U.S. District Court which held that under Maryland law, directors may lose their independence by virtue of being paid to serve simultaneously on the boards of several funds in the same mutual fund group. The proposed legislation calls for the Massachusetts standard for fund director independence to be the same as that under the Investment Company Act, the federal law governing mutual funds. That act permits directors to serve on multiple boards.

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