Mutual funds and the rest of corporate America are suffering the repercussions from an overly zealous SEC, lobbyists charge. Although SEC Chairman William Donaldson has signaled that the SEC has no plans to let up in its lawsuits, the person at the center of the lobbyists' fury is chief enforcer Steven Cutler.

Appointed director of the division of enforcement in December 2001, two months before the Enron collapse, Cutler and his staff have since brought a record 1,300 enforcement cases.

"We have a responsibility," the former securities lawyer told the Financial Times. "I feel, personally, a responsibility to make sure we are adhering to the law and are bringing prosecutions that are consistent with the legal authority."

But David Hirschmann, senior vice president at the U.S. Chamber of Commerce - which is also suing the SEC over the independent chairman issue - countered: "The balance between going after lawbreakers and protecting the innocent, especially when it comes to companies, has gotten out of whack." In fact, the Chamber is so concerned that it is preparing to issue a report on how the SEC has gone too far. And The Business Roundtable, an association of Fortune 500 CEOs , believes aggressive enforcement is thwarting risk-taking by big business.

In fact, the three Republican commissioners, Paul Atkins, Cynthia Glassman, along with Chairman Donaldson, have questioned recommendations by Cutler's division for stiff fines. Cutler counters, however, that these fines are redistributed back to shareholders and serve as a deterrence.

Echoing harsh words Donaldson recently had for attorneys serving the mutual and hedge fund industries, Cutler indicated his division, employing a staff of more than 1,300, is now investigating lawyers, who will not receive immunity.

"At least some of the malfeasance we have seen in recent years would not have happened if a lawyer had raised his hand and said, 'Stop,'" he averred.

Also on Cutler's agenda: conflicts of interest, stopgap measures and continued cooperation with New York Attorney General Eliot Spitzer.

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