Saying that the Securities and Exchange Commission "simply can’t afford to wait for other storms to break," the commissions voted unanimously today to ask the fund industry to install formal self-regulation procedures in place. The most notable of these is the creation of a self-regulatory agency along the lines of the National Association of Securities Dealers for the brokerage industry.

The $6 trillion mutual fund industry’s expansion to more than 5,000 investment companies and 7,000 investment advisors "has exceeded our resources," Commissioner Robert Colby said. Inspections by the SEC every five years are inadequate protections for investors, Colby said.

"Like cops on the beat, we cannot be everywhere at all times," he said.

Acknowledging that some estimates put annual compliance with the SEC’s ideas at about one million man hours of time a year, an SEC economist said he had not calculated how much these new rules might cost the industry.

But Commissioner Lori Richards said that a self-regulatory agency, in particular, would likely shorten the length of SEC inspections.

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