WASHINGTON – There is no guarantee that another scandal could not plague the fund industry, said ICI President Matthew Fink at the General Membership Meeting here. That’s why fund companies must work to ensure that breaches of fiduciary responsibility never occur again, Fink and other executives said.

The fund industry must be more proactive in its dealings with regulators, noted ICI Chairman Paul Haaga. "We must continue to support tough, effective mutual fund regulation and be willing to suggest ideas to the SEC and help its new risk assessment office," Haaga said. "We must ensure that rules and regulations are working effectively but be mindful that government regulation has inherent limitations. What is needed is a change in mindset that fosters ethical behavior."

In line with that, the industry should welcome "informed criticism" by academics and journalists, he added. "The media ought to be scrutinizing this industry constantly," agreed ICI President Matt Fink. "Skepticism is a good thing for the industry."

Boards of directors also need to be more proactive, said Dawn-Marie Driscoll, an independent director for the Scudder Funds. "One thing we’ve learned from these scandals is that the board needs to be more involved. Independent directors need to meet more often with outside counsel and consultants to ask what questions we should be asking," she said. "We are trying to anticipate what is the next issue we should be focusing on. My guess is that the next issue will come from conflicts of interest."

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