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Funds await changes proposed by SEC


NEW YORK -- Executives in the mutual fund industry said yesterday that investors should not hold their breath waiting for Congress to act on sweeping changes for funds proposed on Thursday by the Securities and Exchange Commission.

They include deregulation of mutual fund commissions and a beefing up of the quality of investment information sent to retirement plan participants.

But there were also suggestions that stand a far better chance of becoming reality soon, executives said, because the SEC itself can make these changes to the Investment Company Act of 1940 without involving Congress.

A number of the changes suggested by the SEC could be adopted by the agency by the end of the year after deliberation with its constituents. "It's a matter of what you can do over your kitchen stove vs. flying to Paris for dinner," said Matthew Fink, president of Investment Company Institute, the trade group for the mutual fund business.

Congress has too much on its plate to worry about an industry that is not in apparent crisis, fund executives said yesterday.

John D. Dingell, D-Mich., chairman of the House Energy and Commerce Committee, said in a statement yesterday that his committee "might have had a chance to pass legislation this Congress" had the SEC completed the study earlier. But the issues "can and should be addressed in the future," he added.

Maryanne Smythe, director of the SEC's investment division, said, however, that her staff met late yesterday to set a schedule for getting proposals to Congress.

Fund experts said that they would be particularly surprised to see Congress aggressively take up the cause of an SEC proposal to deregulate mutual fund fees.

Curiously, the proposal to allow investors to negotiate fees with fund companies has been opposed by both investor advocacy groups and the fund business itself.

The SEC's position is that deregulation will increase competition, and investors will turn out winners. Investor advocates argued, though, that past financial deregulation had led to price breaks only for large institutional investors.

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