ORLANDO, Fla. -- Speaking at the 2004 Operations Conference and Service Provider Exhibition here, Investment Company Institute President Paul Schott Stevens stressed the importance of funds and their operations support working together with regulators and the media to redefine the culture of the mutual fund business in the wake of the largest scandal in its history.

In a keynote address, Stevens laid out his agenda for next year for the more than 400 vendors and fund operations personnel. The lynchpin of his agenda includes advancing shareholder interests, raising the bar for ethical standards and working with the media to raise public awareness of mutual funds as the "very best investment vehicle for people of modest means."

He acknowledged the SEC's hard work in making the necessary adjustments to adhere to new regulatory requirements but noted that there is more work to be done. "The effective date of a new rule begins the process, it doesn't end it," he said.

Stevens also encouraged attendees to submit their comments to the ICI and the SEC regarding alternatives to the proposed hard 4 p.m. close rule and the mandatory 2% redemption fee for rapid trading in order to effectively curb market timing (see related story, page 9).

When asked whether mutual funds should shoulder responsibility for intermediaries' adherence to fund prospectuses regarding timing policies and other guidelines, he told attendees that while they may not be directly responsible, they certainly have a shared interest and a shared purpose. "You can't be indifferent to the problem," he said.

Additionally, he pledged that the ICI would work closely with regulators and Congress to ensure that breakpoint discounts are delivered to investors who qualify for them. As for the SEC's role going forward, he expects the Commission to continue to be aggressive and "keep our feet to the fire."

Commenting on the re-election of President George Bush, Stevens cheered Bush's efforts to bring Social Security reform to the fore but dismissed the notion that privatizing Social Security would serve as a bonanza for Wall Street and mutual fund firms. Under the Bush administration's second term, mutual funds are less likely to face increased legislation, he said, noting that a Republican majority in both the House and Senate should prevent "radical" reform bills from being passed.

Stevens said the industry needs to "take a deep breath" in the aftermath of the trading scandal and subsequent SEC rule changes. "People in the industry need time to make these new rulemakings work," he said.

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