WASHINGTON -- Banks should be allowed to broaden their mutual fund activities in return for broader disclosure to securities regulators, a top Securities and Exchange Commission official said.

The change suggested by SEC Commissioner Richard Y. Roberts would entail eliminating Glass-Steagall Act curbs on banks' mutual fund activities.

Such a move would allow banks to organize and distribute their own mutual funds.

Right now, banks must use outside distribution companies for certain fund activities.

"I personally welcome bank involvement in the investment company industry," Mr. Roberts said this week, speaking at the Bank Securities Association's national compliance conference here.

But Mr. Roberts added that his full support was conditional on banks giving up brokerage and investment advisory exemptions that keep some of their activities off-limits to securities regulators.

For instance, banks' investment advisory arms are not regulated by the SEC. Instead, they are overseen by banking regulators.

Also, banks do not have to register with securities regulators to sell investments.

But most banks do, by setting up brokerage affiliates, or contracting with investment products marketing firms that are overseen by securities regulators.

In calling for tradeoffs with banks, Mr. Roberts was resurrecting a concept that was previously broached in 1991, in a financial institutions reform bill backed by the Treasury Department.

John D. Dingell, chairman of the House Energy and Commerce Committee, also wants banks' securities activities to come fully under the purview of securities regulators, and has introduced a bill that would do that.

Bankers and other industry insiders had faint praise for Mr. Roberts' suggestion, noting that banks have already become entrenched in the mutual fund industry, without the repeal of Glass-Steagall.

"I'm not sure it's such a good deal for banks," said Melanie Fein, a partner with Arnold & Porter, Washington. "I'm not sure they really need it."

In fact, another attorney said, banks could end up making concessions that would mitigate the gains being offered.

"It's good to hear the commission is prepared to support bringing the banking industry into the modern age," said Robert M. Kurucza, a partner at Morrison & Foerster, Washington.

"However, the rub will be what added level of prohibitions will be imposed in the form of firewalls," he said.

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