A while back, Edward ("Ned") Johnson III, chairman of privately owned mutual fund powerhouse Fidelity, penned an editorial that ran in The Wall Street Journal. He took aim at a proposal by the Securities and Exchange Commission to require all chairpersons of mutual funds to be "independent" -- meaning they'd have no stake in the fund's management company.

According to Hoovers.com, "FMR Corp. is semper fidelis (ever faithful) to its core business. The financial services conglomerate, better known as Fidelity Investments, is the world's #1 mutual fund company. Serving some 18 million individual and institutional clients, Fidelity manages nearly 340 funds and has approximately $775 billion of assets under management. . The founding Johnson family controls most of FMR; Abigail Johnson, CEO Ned's daughter and heir apparent, is the largest single shareholder with about 25%."

If the SEC rule change sticks, Johnson won't qualify to lead Fidelity funds. If you're thinking, "Too bad, Ned," think again. He makes some compelling arguments against the proposal. For example:

  • "Independent chairpersons obviously didn't prevent past abuses, since a number of the mutual fund companies involved in the scandals had independent chairmen."

  • He quotes Mark Hulbert, saying, "Almost all of the several dozen academic studies on board independence have found [either] that it has no correlation with company performance or that companies generally perform worse when they have more outsiders on their boards."

  • ". my family and I have made considerable investments in [Fidelity] funds for over half a century. Far from constituting a conflict, these dual roles mean that my personal, professional and financial interests are directly aligned with those of Fidelity shareholders."

  • "Regulators and legislators should ask themselves this question: If a wrongdoer is tempted to try some abuse against fund shareholders, which board chairman would they rather try sneaking it past -- an industry veteran with a direct and personal interest in the fund or a chairman with 40 years experience making carbonated beverages, and who has just flown in for a two-day board meeting?"

It seems rather good and Foolish for company bigwigs to eat their own cooking, and to take on the same financial risk that shareholders do. Could part of Microsoft's (NASDAQ:MSFT) success stem from the fact that the people running it have sizable ownership stakes? Similarly, the family of Wal-Mart (NYSE:WMT) founder Sam Walton owns much of the company as Walton himself did, and Warren Buffett is the largest shareholder of his rather successful firm, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).

Learn more about mutual funds in our Mutual Funds Center . And check out a sample issue of our brand-new Motley Fool Champion Funds newsletter, which delivers promising funds each month.

Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway and Microsoft.