Our friends at the Securities and Exchange Commission (SEC) have been busy lately, even during this period of leadership transition.

Yesterday, the Commission voted to invite public comment on its proposal to require the mutual fund industry to create a self-regulatory organization. We applaud the idea of seeking public comment, but wonder whether requiring foxes to set up a henhouse-monitoring bureau is really the best solution. Apparently, the mutual fund industry doesn't want to regulate itself and wishes the SEC would do it, while the SEC would rather leave it to the industry.

Meanwhile, the Commission postponed its vote on Regulation Analyst Certification (Reg AC) until tomorrow. The proposed rule would require Wall Street analysts to certify that they actually believe what they write in research reports. (This is meant to address recent scandals involving analysts who seemed to write what others wanted to hear -- all to get their kids into a prestigious private school, or just to advance their careers.)

The mutual fund industry, despite heavy lobbying, received a blow last month when the SEC adopted a new rule requiring the disclosure of proxy votes on behalf of shareholders (something the Fool has supported in several recent columns). This should shed welcome light on a dark corner, as mutual funds are often major shareholders in public companies, yet they have kept secret how they vote on company issues. And according to Reuters, "About half of all U.S. households owned shares in mutual funds in May 2002, down slightly from a year earlier, but far ahead of the 1992 level of 27% and 1982's 11%."

Meanwhile, SEC chairman nominee William Donaldson has a big interview with the Senate Banking Committee today. We hope they question his opposition to Regulation Fair Disclosure two years ago. Fools have embraced Reg FD because it prohibits companies' old nudge-nudge, wink-wink practice of offering valuable inside information to Wall Street analysts, but not the public. If Donaldson doesn't like the idea of small investors having equal access to material information about the companies they own, that's a bad sign.

Keep up with SEC developments on its website.