(MONEY Magazine) – For many in the fund industry, Sept. 3, 2003 was a day that will live in infamy. That's the day Eliot Spitzer alleged that a hedge fund improperly traded in and out of mutual funds, leading to a wave of regulatory attacks against companies like Janus and Putnam. "Safeguarding the Brand When the Industry Is Under Fire," moderated by MONEY's Jason Zweig, included industry heavy-hitters Jack Bogle, founder of Vanguard, Putnam CEO Ed Haldeman, Ariel Capital's Mellody Hobson and Janus chief operating officer Girard Miller.

Why did this happen?

JASON ZWEIG: One troubling aspect of the trading scandal appeared to be a pattern of front-line employees asking their boss, "Is this right?" and the boss saying, "Go ahead and do it," without addressing whether it was right. Why did no one say, "That's not right"?

JACK BOGLE, VANGUARD: There's a lot of, "If you want to get along, go along." And that points to the central issue--a lot of firms are run for the benefit of the management company rather than for the shareholders.

MELLODY HOBSON, Ariel: Desperate people do desperate things. People weren't thinking clearly. Fund managers had experienced some very tough years, and they felt under siege. They started to panic and worry about their jobs, as well as the future of their companies. So shareholders ceased to be the No. 1 priority.

How much should fund managers have to disclose?

DON PHILLIPS, MORNINGSTAR: Right now investors are wondering whom they can trust and whether management's interests are aligned with shareholders'. Should a manager have to disclose whether he has a stake in his own fund?

M.H.: Immediately after Sept. 3, I made sure that every board member owned shares of Ariel funds. Out of 75 employees at Ariel, only two didn't. And yet, in today's litigious environment, we had lawyers saying, "You can't force anyone who works at Ariel to own your funds."

J.B.: Nobody likes having their compensation disclosed. But I'm not sure why funds are exempt from having to disclose information that every publicly held company in America has to reveal. Disclosure not only provides valuable information to shareholders, but it modifies the way managers run their funds. Managers who have significant stakes in their funds are much more concerned, for example, with tax efficiency.

How do we prevent abuses?

J.Z.: What reforms do you think would make the fund industry better for investors?

ED HALDEMAN, PUTNAM: The best solution is real disclosure. Disclosure in small print in the back of the prospectus using first-year law school language is not real disclosure. We've got to be more up front about what's really going on with fees and commissions.

J.B.: We need strong governance reform. We need an independent chairman. And at least 75% of the directors on a board need to be independent. We also need a federal statute that says directors have a fiduciary duty to make sure that funds are organized, operated and managed in the interest of shareholders. Think about putting the shareholder first, no matter how painful.

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