SEC Chairman Arthur Levitt is expected to recommend changes in the way mutual funds are governed at an industry conference on mutual fund regulation which begins today.

Industry lawyers and executives expect Levitt will propose some best practices - non-binding guidelines for industry conduct - and perhaps, outline new regulations with respect to mutual fund directors. The most widely-anticipated proposal would require that at least a majority of mutual fund directors be unaffiliated with a fund adviser, according to industry lawyers. Lawyers also expect Levitt will suggest a new standard which would make it more difficult for a former employee of a fund adviser to qualify as an independent director.

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