Representatives of the mutual fund and investment services industry appear before the Senate Banking Committee on Wednesday in a full day of hearings on reshaping the scandal-plagued industry.

Issues on the table include the proposed elimination of soft-dollar payments for research, an end to directed brokerage commissions, reform of fee structures and increased disclosure requirements designed to protect investors.

Politics may derail the passage of a blanket reform law, despite the clamor since last autumn's investigation by New York State Attorney General Elliot Spitzer, which uncovered widespread industry abuses, including market-timing and late trading.

While all major players agree that the $7 trillion industry needs fixing, factions disagree on whether it should be left to the Securities and Exchange Commission or to Congress, which could pass laws that reform proponents say go further than the regulatory agency.

But a lengthy reform process offers ample opportunity for derailment, particularly in an election year.

Although the scandal made investment reforms a topic of rare unanimity in Congress, at least one analyst believes legislation is not in the cards this year.

"We believe there is a less than 50% chance that a mutual fund industry reform bill will be passed into law by Congress in 2004," says Crystal Mingione, Washington affairs analyst for the Susquehanna Financial Group, an institutional sales, research and market-making firm that would be heavily affected by new legislation.

"They have a lot of issues on the agenda as it is, and if we don't see legislation passed out of the Senate Banking Committee by May, it's increasingly unlikely we would see anything at all."

But backers say piecemeal fixes proposed by the SEC, such as limits on the use of soft dollars for research payments and restrictions on frequent trading in and out of mutual funds, aren't enough.

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