Saying that the gigantic growth of the fund industry has stretched its resources to the limit, the Securities and Exchange Commission asked fund companies last Tuesday to consider appointing chief compliance officers and put internal compliance programs in writing. More significantly, the SEC asked the public and the industry to comment on the creation of a mutual fund self-regulatory organization (SRO), much like the National Association of Securities Dealers, to work in tandem with the SEC.

"Like cops on the beat, we cannot be everywhere at all times," SEC Chairman Harvey L. Pitt said when proposing the changes. Although the mutual fund industry controls $6 trillion in assets, combined with their investment advisors, this is a $21 trillion industry, Pitt said.

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