NEW ORLEANS – As the industry verges on the edge of a full-fledged crisis, executives at the Investment Company Institute’s annual operations conference here opted not to speak bluntly about what needs to be done in the wake of potentially damning revelations by New York State Attorney General Eliot Spitzer.

"It might be easy to be down on our industry right now, and some of you may even be reevaluating whether it’s worth working in," Nino Palermo, vice president of American Funds and conference chair, told attendees. "As an industry, the last three years have been a roller-coaster ride," he said, noting cost containment and layoffs. "No sooner does the market begin to show life, do other things surface. We are confronting things we’ve never had to confront before." However, Palermo said that the mutual fund industry is different than other industries in that when problems arise, individual companies tend to work together to solve the problems for the good of the industry.

One session, scheduled for late Monday, was set up to help attendees prepare for an SEC examination, focusing on risk management and internal controls, but the absence of the ramifications of the Spitzer probe on the docket was glaring.

Also noticeable was the low number of attendees at the sessions, as panelists spoke to rooms only half or one-third full. The ICI eliminated the conference’s annual vendors exhibition and shortened a conference that traditionally has been three days to just two, due to what it called budgetary concerns of attendees.

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