Eliot Spitzer wants to make sure the mutual fund industry’s laws get changed. So he’s going to the epicenter of where laws get changed: Washington D.C. There, the New York attorney general will take the industry’s annual $70 billion in fees to task.

"Fund directors do not – and cannot – negotiate hard on fees," Spitzer will tell Congress, according to a published transcript of Spitzer’s speech. "What else would you except when the chairman of a mutual fund is also the chairman of the advisory company?"

And while some executives in the market timing probe have said that the illicit arrangements could not have been detected because they were made through surreptitious e-mails, Spitzer is planning to say that had directors been vigilant, they would have been suspicious of the wild swings in assets.

Spitzer also plans to expose the $50 billion in advisory fees and $20 billion in management fees that funds took in last year and call attention to estimates by Vanguard founder John Bogle that assets between 1980 and 2000 grew 60 times – while fees grew 90 times. Spitzer will also call the mutual fund industry to task for charging retail investors 25% more in fees than institutional investors.

"One of the main messages will be that our office will not sign off on any settlement that doesn't include reform measures," said Spitzer spokeswoman Juanita Scarlett.

Spitzer already has some backing in Washington, as his probe has prompted a similar calls for reform from the U.S. Securities and Exchange Commission, including requiring explicit disclosure in fund offerings about market-timing policies. Funds currently include such information in prospectuses. The SEC is also expected to require funds to impose clear-cut rules to prevent late trading.

For its part, the Investment Company Institute announced it will testify for a number of safeguards, including requiring funds to receive orders no later than 4 p.m.

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