When the comptroller of the currency took banks to task for inadequate disclosure of mutual fund risks, many bankers were left with a question: What's the evidence?

He simply looked in his own backyard, according to Leonora Cross, chief spokeswoman for the comptroller, Eugene A. Ludwig.

"He doesn't have the hard data yet, and he wasn't saying that he did," Ms. Cross said. "But we've seen examples here in Washington."

Ms. Cross said the Comptroller's office conducted a random sample of banks in the Washington area to gauge what they are doing to inform consumers about investing.

The findings weren't pretty. Ms. Cross said the agency's informal survey turned up numerous examples of potentially misleading advertisements and brochures. Disturbingly, all the materials had been issued since July, when the Comptroller released mutual fund sales guidelines.

"We were very careful to pull things that have been produced since the guidelines went out," Ms. Cross said. "This is not something we were trying to do a |gotcha' on."

Mr. Ludwig's chief concern was that some banks are not disclosing conspicuously that mutual funds lack Federal Deposit Insurance Corp. coverage.

One bank published an ad with the slogan, "Now you can invest in a mutual fund without giving your money to strangers." The ad included a picture of the bank building with the bank's name clearly visible, sending a confusing message to consumers, Ms. Cross said.

Warning of a Crackdown

Mr. Ludwig aired his concerns in a speech last week at the American Bankers Association convention in San Diego. He warned the bankers that Congress could step in with tough legislation if banks don't clean clean up their acts.

Neither Mr. Ludwig nor his spokeswoman would release the names of the banks whose advertisements provoked the warnings.

"He was concerned about being too specific, because what he sees most frequently is stuff that is in local papers or banks that are in Washington," Ms. Cross said.

But, she added, the Comptroller will soon start gathering information from a broader cross-section of banks.

"We're doing spot checks right now, particularly at the larger banks," Ms. Cross said.

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