Maryland's highest court last week dealt a setback to that state's legislature and the mutual fund industry in the ongoing fight over what makes a mutual fund director independent.

The Maryland Appeals Court ruled unanimously that a 1998 law that defined what makes a mutual fund director independent under Maryland law was unconstitutional. The directors' law violated a provision in the Maryland Constitution that permits the legislature to include only one subject in proposed legislation, the Appeals Court said in a 16-page decision dated March 14.

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