The Investment Company Institute and the American Bankers Association are arguing over a proposal that would permit mutual funds to solicit investments through newspaper ads.
The ABA charged two weeks ago that a liberalized rule proposed by the Securities and Exchange Commission would penalize banks and hurt consumers.
Banks could not take advantage of the rule because of advertising restrictions imposed by the new Truth in Savings Act, ABA president Allan R. Tubbs wrote to key Washington legislators and regulators.
His letter also said that promotional copy might lure consumers into investing.
ICI, the mutual fund industry's leading trade group, responded last week that the ABA had "completely mischaracterized the SEC's staff proposal."
The bankers' group "ignored the basic fact that the proposed mutual fund newspaper advertisements would be, under federal law, prospectuses, which would be required to contain detailed disclosures," wrote ICI president Matthew Fink in a letter to legislators who oversee banks and the SEC.
Who Discloses More?
Moreover, he argued, banks have had more lenient disclosure requirements than mutual fund companies but lost market share anyway.
It "can be argued that mutual funds have gained . . . precisely because funds have provided full and fair disclosure to the public and that banks have lost market share because they have not provided such disclosures," Mr. Fink wrote. The SEC's proposal would allow fund companies to include investment applications in print ads.