One day after posting my article "Who's On Board" the SEC made major changes to the mutual fund board of director requirements (I never thought I could make such an immediate impact). By a 3-2 vote, the SEC made changes that will dramatically alter the look of hundreds of mutual fund company boards. Here are the specifics:

The chairman of every mutual fund board must now be an independent. An estimated 80% of fund boards are chaired by an insider, meaning 80% of fund companies will be looking for a replacement chairman.

The SEC also bumped up the requirements for the composition of the board from a "majority of independents" to 75% independents.

With these two new rules, hundreds of fund companies will be scrambling to find new members for their board of directors. This may be the biggest & fastest alteration of the fund boards ever. Potential candidates will be in short supply.

Though I applaud the focus on shareholders, there are still some holes in the new SEC requirements. As I displayed in "Who's On Board", even the independents may not be the best choice for fund investors. Hiring unknowledgeable friends that are considered "independent" may only transfer more control to the CEO. As I mentioned in the article, I hope to see fund companies hire investor advocates for their board.