The gatekeeper who chooses which mutual funds Citicorp brokers are supposed to sell stepped down last week.

Susan L. Malley resigned as chief investment officer of the Citicorp Investment Services brokerage subsidiary to set up her own investment management firm, a spokeswoman for the New York-based banking company confirmed. Ms. Malley did not return calls seeking comment.

Her day-to-day responsibilities are being assumed by Arnold E. Amstutz, who became her boss after joining the banking company a year ago as chairman and chief executive of the Investment Services unit.

Privately, mutual fund company executives who sell their products through Citicorp say Ms. Malley's departure may have been spurred by Mr. Amstutz's ascension. The two executives had differing views on how to pick products, according to several industry sources.

The selection system Ms. Malley devised uses a complex matrix to evaluate 650 mutual funds for performance, asset size, and longevity.

Funds are scrutinized on a quarterly basis and, based on the results, placed into "buy," "sell," and "hold" categories.

Mutual fund company executives complain that the system is confusing and inconsistent with the way other banks choose products. Some say they have given up trying to gain access to Citicorp's investment products program.

They said they did not want to pledge sales support and resources if their funds aren't guaranteed to be on the banking company's preferred products list from quarter to quarter.

For the time being, no changes in the way Citicorp selects products are anticipated, a spokeswoman for the bank said. However, she added, "Arnold (Amstutz) is always looking at changes."

In an interview in November, Mr. Amstutz would not comment on whether changes were looming. Nevertheless, several mutual fund executives, who asked not to be named, said that Citicorp was considering a more traditional way of choosing funds.

This change would take advantage of services and support that fund companies offer to banks with which they do substantial business.

A change in the product selection process could prove lucrative for those mutual fund companies that secure spots on Citicorp's short list.

The Citicorp's brokerage affiliate is among the top producers in the banking industry. It amassed $2 billion of sales for 1993, according to Strategic Insight, a New York consulting firm that tracks the mutual fund industry.

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