No one ever said it would be easy for the mutual fund industry to embrace commercial bankers.

For the past two years. the Investment Company Institute has been trying to recruit bankers for its board of governors. But the results have been mixed at best.

Last week, Dudley M. Nigg, an executive vice president of Wells Fargo & Co., became the fourth banker in two years to be elected to the board -- and the second to resign without completing his term.

Mr. Nigg's remarkably short tenure of less than a week wasn't a condemnation of the board. It simply stemmed from a shift in his duties at the San Francisco-based banking company. After several years heading the mutual funds business. he has become head of Wells Fargo's alternative-distribution group, a unit that seeks new outlets for retail banking products.

Nonetheless, the episode was a setback in the institute's long-running effort to diversify its leadership to reflect the increased role of banks as sellers and managers of mutual funds.

"If you look at how far banks have come, the ICI would have been remiss in not including them," said Robert M. Kurucza, a law partner with Morrison & Foerster, Washington. "Banks still need more seats on the board of governors."

The previous record for a brief tenure by a banker was set by W. Christopher Maxwell, who in October 1992 became the first banker on the institute's board. He resigned two months later when he quit his job as head of Chase Manhattan Corp.'s mutual funds business. Mr. Maxwell has since moved to Cleveland-based Keycorp, where he is executive vice president for mutual funds.

Mr. Maxwell's election to the institute's board had been heralded as a sign that banks were winning acceptance within the industry's premier trade group.

But while two other bankers -- Leonard M. Spalding Jr. of Chase Manhattan Corp. and Mark Williamson of NationsBank Corp. -- have since won board seats, some bankers say they are not getting the recognition they deserve.

"The representation on the board is not proportionate to banks' role" in the mutual fund industry, Mr. Maxwell said. Though banks now manage more than $200 billion in mutual fund assets, "the ICI is kind of tentative in its acceptance of banks," he maintained. Indeed, the institute's 15-member executive committee, where many of the policy directives are debated and decided, has no bankers on it.

Despite the low representation of banks on the governing body, the institute has made "a nice attempt at bringing in most of the major banks," Mr. Maxwell said. In all, 101 banks, trust companies, or thrifts had joined the trade group as of July.

Executives from the Investment Company Institute insist that the trade group does represent bankers' interests.

"From our perspective, there are three or four people on the board" who represent banks, said Erick Kanter, the trade group's chief spokesman.

For example, he said, Daniel C. Maclean, general counsel of Dreyfus Corp., is a board member, and the New York-based mutual fund company was recently acquired by Mellon Bank Corp.

Other board members who have "extensive bank relations" include Kenneth R. Leibler, president of the Liberty Financial Cos., Boston; Lawrence J. Lasser, president of Putnam Investments, Boston; and John W. McGonigle, general counsel at Federated Investors, Pittsburgh.

The institute tries to be "as responsive as we can" to banks, Mr. Kanter said. "They should not feel that they are being ignored or neglected."

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