AMERISTOCK FOUNDER Nicholas Gerber wanted something different for one of the mutual funds he runs.

He got it all right, but not quite in the way he expected.

In a move suggesting that the fund world's system of independent directors can work for shareholders, Gerber's grand plans for Ameristock Focused Value were derailed by his board late last month. At a time when the financial industry appears rife with conflicts, and when regulators have spent years pushing for stronger guidance from directors, Gerber's story is an encouraging one for investors.

"Management companies win out over boards most of the time," says Geoff Bobroff of Bobroff Consulting in East Greenwich, R.I. "The manager typically gets what the manager wants, and exceptions to that are very rare because so few boards have the gumption to stand up to management."

To see how shareholders won out in this case, let's examine the unusual situation Gerber was creating and the even more unusual response it elicited from the board.

As detailed in this column in April, Gerber wanted to change Ameristock Focused Value - which has an outstanding record - into a closed-end fund. Unlike a traditional or open-ended fund, a closed-end fund has a limited number of shares, which trade like stock and are priced based on market sentiment, not net asset value.

Once Focused Value was a closed-end fund, Gerber planned to buy a company outright, and then petition regulators to grant his firm the status of a public company (an ordinary stock) rather than that of an investment company (a mutual fund).

Gerber would have created a public company by using the fund to raise money; he would have avoided a traditional initial public offering. In effect, he was opening a back door to becoming a public company that had not been tried for years.

Gerber had the board's approval to explore the idea. He expected the board's full support and had begun working on paperwork needed for a filing and a proxy vote on the deal. Ameristock Focused Value stopped taking additional shareholders in anticipation of the conversion, which he expected would begin in July.

But directors balked once they saw Gerber's more detailed plans.

The biggest sticking point appears to have been Gerber's time. Directors wanted Gerber to continue running the firm's flagship Ameristock fund; they also felt that the new company needed him at the helm to succeed. Gerber, meanwhile, could not commit himself to being the chief executive of the new firm if he kept running the $1.5 billion Ameristock fund.

"Unless we could find my doppelganger, I couldn't promise that I could do both jobs," Gerber says.

Ameristock director Stephen J. Marsh says, "Nick definitely wanted to do it but, after reviewing the situation, the consensus of the board was that it was not something we wished to pursue."

Gerber chose not to fight for his conversion once it was clear that he could not get unanimous approval. Instead, he reopened Ameristock Focused Value to new investors and shelved his conversion plans.

In the few public disputes between directors and fund managers in recent years, shareholders have sided with the fund manager. In 1997, Louis Navellier was voted out as manager of a Navellier fund by directors who thought he had not properly followed procedures involving a change in the fund's operation. A year later, Don Yacktman fought a board effort to remove him from the Yacktman funds for allegedly deviating from his investment strategy.

Both cases involved personality conflicts and sour grapes, and both managers won proxy fights to remain in charge.

Presumably, Ameristock investors first wooed by Gerber's knowledge of the market would have sided with him over the board. Gerber most likely could have created his public company over the board's objections.

"In these days of Enron and other scandals, I just couldn't see doing something that made people question what was going on," says Gerber.

Burton Greenwald of the consulting firm B.J. Greenwald Associates in Philadelphia says, "Most boards do their job pretty well, which may be why you normally only hear about the board when something bad has happened.

Still, it's good to see a situation turn out the way it's supposed to - in the best interest of shareholders for a change."

Chuck Jaffe is mutual funds columnist at the Boston Globe. He can be reached by e-mail at jaffe@globe.com or at the Boston Globe, Box 2378, Boston, Mass. 02107-2378.