Mutual Fund Industry Forms Panel To Assess Personal Trading Issue
WASHINGTON — THE nation's mutual fund industry, buffeted by publicity about the personal trading practices of portfolio managers, said Wednesday it had formed an advisory panel to consider more stringent codes of conduct.
``We will assess the adequacy of current standards, with an eye toward any needed changes in mutual funds' code of ethics,'' said Ronald Lynch, managing partner of Lord, Abbett & Co. and a member of the new advisory group.
The six-member panel will report its findings to the Securities and Exchange Commission (SEC) and Congress after studying industry standards for three months. ``The vitality and continued success of the mutual fund industry surely rest on public trust and confidence,'' said Matthew Fink, president of the Investment Company Institute, the trade group that announced the creation of the panel.
Managers who pick stocks for mutual funds can legally trade on their own behalf. But the practice poses conflicts of interest and could open the door for abuses. Personal trading has come under attack recently following reports suggesting that the practice may be widespread.
Mr. Fink met with SEC Chairman Arthur Levitt late last week to discuss the internal trading issue after the agency revealed that it had expanded its probe of the practice.