Despite recent criticism that not only the mutual fund industry but the Investment Company Institute itself is in need of reform, the ICI issued a statement saying it is cooperating with regulators in order to halt the downward spiral that the mutual fund business has fallen into.

"We are definitely not in denial. This is a real issue," Vice Chairman Jim Riepe of T. Rowe Price, a member of the Investment Company Institute’s board of governors, told Reuters. "We need to tighten up procedures and rules in the process that have allowed people to excessively trade mutual funds."

The ICI’s declaration is in stark contrast to many in the industry, including Don Phillips, managing director of Morningstar.

"ICI’s policies created the environment in which some of the things that happened recently happened," Phillips told Reuters. "This is an industry that has lost its way and is no longer exercising its duties to investors." He added that contrary to Riepe’s contention, the ICI is "in denial."

Chief on Phillips’ list was the ICI’s fight earlier this year against demands that information regarding how officials voted on proxies be disclosed by mutual fund companies.

Lou Harvey, president of the research firm Dalbar, said that instead of worrying about the industry, the ICI is more concerned with saving its face.

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