The Securities and Exchange Commission, rather than Congress, will take charge of reforming the $7.6 trillion mutual fund industry, and is working on new rules aimed at restoring investor confidence that will be ready by early summer. John Nestor, a spokesman for the SEC, said mutual fund reforms were the agency's top priority, and Chairman William Donaldson has been making the case that the regulator should take the lead in revamping the industry, rather than ceding authority to Congress. Legislators had taken a rare bipartisan approach to fixing the mutual fund industry in the wake of the market-timing scandal, with the House of Representatives passing a bill by a wide margin and at least three proposals circulating through the Senate Banking Committee, which concluded extensive hearings on industry reforms earlier this month. "I think we were all shocked to discover the complicity of certain elements in the industry in condoning widespread unethical and illegal practices," Donaldson said in a recent speech. "As I testified before the Senate Banking Committee ... I think we have all the authority we need to move our rule-making agenda, and the leadership of the committee seemed to agree that additional legislation is not necessary at this time." He said the SEC is pushing for rules requiring far-reaching compliance policies, restrictions in the ways soft dollars can be used by investment advisers, codes of ethics for registered investment advisers and effective rules on settling mutual fund share prices at the end of the trading day. Donaldson's visibility and strong words since the conclusion earlier this month of mutual fund reform hearings by the Senate Banking Committee is a clear sign that the SEC is asserting its authority and trying to reform the mutual fund industry through rule-making, rather than waiting for Congress to pass new laws, a more time-consuming and potentially volatile process, said analysts and industry observers.