The industry could tempt outsiders with high financial rewards

The Security and Exchange Commission, (SEC) said thousands of mutual fund boards must have an independent chair.

Experts estimate that 80% of all boards need to make changes and most newcomers will be found by word of mouth.

The $7.4 trillion industry was rocked by scandal when Putnam Investments was caught engaging in "market timing".

Outsiders

"The first place to look will be the existing directors," said former SEC Chairman Harvey Pitt.

The boards will need to be filled with people who know how mutual funds work, such as lawyers, accountants and economists.

Costs of running the funds may rise as trustees may demand more pay and better insurance coverage, to cover liability, experts said.