Two Former Investment Company Institute chairmen offered 11 suggestions yesterday to re-align the mutual fund industry with its former impeccable image.

Attacking the use of soft dollars for research, lack of redemption fees for in-and-out traders and costly marketing campaigns, former CEOs Jon Fossel of Oppenheimer and Don Powell of Van Kampen told ways these improprieties could be stopped.

Fossel carved the problems up into general areas. "There are three themes here: expenses must be lowered, disclosure must be far more open, and conflicts of interest must be eliminated," he said.

Quarterly disclosures, conflicts of interest, and adherence to the ICI code of ethics – specifically the part of it requiring executives to disclose their own holdings - were also stressed as growing but correctable problems in the legally and ethically slumping $7 trillion industry.

But as has been the case recently, market timing and its impact on individual investors seemed to be the key issue.

"It is time to speak out," Fossel said. "We have to keep short-term traders out of mutual funds because they cost long-term investors money.

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