Senate panel seeks new probe

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Tuesday, May 11, 2004 | 11:14 a.m.

WASHINGTON -- The U.S. Senate Banking Committee will ask the Securities and Exchange Commission to investigate whether Citigroup Inc., Merrill Lynch & Co. and other banks improperly stuffed client shares into mutual funds during the three-year stock market decline, said a spokesman for Committee Chairman Sen. Richard Shelby.

"Clearly, one of the key issues in mutual fund reform is eliminating the conflicts of interest that harms investors," said Andrew Gray, committee spokesman.

Shelby is "deeply concerned" by a Bloomberg News report that found that as much as 30 percent of the holdings of investment bank mutual funds were from bank clients, Gray said.