While it’s good news for investors that a majority of mutual fund boards have adopted the best practices advocated by the Investment Company Institute and the Independent Directors Council, some critics believe those suggested practices should be mandatory.

Certainly, progress has been made; nearly 90% of fund boards are comprised of 75% or more independent directors, up from 50% 10 years ago. The current requirement is that half are independent.

About 66% of fund boards have an independent chairman, 85% have an independent lead director, and 90% have separate legal counsel for their independent board members.

But an editorial in MarketWatch says that fund boards are overextended, and that because even independent directors are so handsomely paid by the fund company, they have no incentives to properly police their funds. Further, former executives from the fund company should not be considered independent, the editorial says.

Lastly, the piece calls upon the Securities and Exchange Commission to make an independent chairman and 75% of a fund board to be independent a requirement.

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