Mutual Fund regulations, especially the Investment company Act of 1940, attempt to provide all investors with a well-governed, transparent and a professionally managed investment vehicle. Which one of the following actions shows that the current regulation cannot protect investors from fund manager actions that benefits the fund manager instead of the shareholder? Fund manager's poor performance leads to liquidation of the fund, and all investors receive the NAV of the share value less any liabilities payable. Fund loads (fees paid to distributors of the fund) are subject to regulatory restrictions, which means that the loads cannot be more than a certain % amount. In the event of a fund merger, shareholder (investors) of a target fund benefit as they are now part of a better performing fund. The Board of Directors negotiate the Investment Advisory contract with the Fund Manager, where the management fees is established based on the performance of the fund compared with its peers and against its market based benchmark. Fund manager allows fund size to increase beyond the optimal size where diseconomies of scale reduce the excess returns generated by the fund