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The Securities and Exchange Commission has decided to begin the process of overhauling 50-year-old regulations for the $1.2 trillion mutual fund industry.

"After half a century of service, it certainly is timely to review whether we can enhance safety and soundness and at the same time reduce unnecessary costs," SEC Chairman Richard Breeden said in agreeing to seek public comment on ideas for updating the Investment Company Act.The SEC is making no specific proposals on changes to the existing law, last revised in 1970, just as the boom in mutual funds was beginning.

Instead it is asking fund managers and investors to suggest ways to update the act so the SEC can better protect investors against fraud, keep costs low and promote innovation while ensuring the funds' integrity.

Since 1970, the industry has ballooned from 400 firms handling $40 billion in assets to 3,500 firms today with $1.2 trillion in assets, the SEC said.

The SEC suggested that it would scrutinize recent developments in fees charged to customers, global trading of securities and easier ways for investors to redeem their shares in funds that have limited amounts of stock.

Kathryn McGrath, director of the SEC's division of investment management, said the comments could be the first step toward a major change in how mutual funds are regulated. In a separate vote, the SEC decided to seek public comment on whether investment companies holding foreign securities should be required to keep their financial rec-ords and minutes of board meetings in the United States and in English.

McGrath said the SEC lacks the foreign language skills and the budget to send staff overseas to inspect investment company records.

But commissioners expressed skepticism about enforcing such a requirement, especially when the United States is trying to reduce barriers to holding foreign securities.

"I do find this very curious, if not laughable," said Commissioner Edward Fleischman.

In agreeing to public comment, Breeden said he is not indicating support for the English language requirement, which he said smacks of ethnocentricity.

The commission also proposed allowing certain companies to file shortened forms when they make an initial offering of securities to the public.