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Y2K Disruption Expected to be Minimal

ORLANDO, Fla. - Corporations worldwide are expected to be hampered by computer problems at the turn of the century, but the mutual fund industry is expected to suffer fewer disruptions than other industries.

About 10 percent of the top 10,000 corporations around the world "will experience material, business-threatening Y2K-related failures, such as a 30-percent or more loss of market share," said Carl Greiner, vice president and director of enterprise data center strategies at the Meta Group, a computer research company in Stamford, Conn.

Greiner spoke at the Investment Company Institute's operations conference here last week.

Data corruption or disruptions at some companies in some less well-prepared countries could have a "cascading effect" on other companies in better prepared areas such as the U.S., Australia, Canada, the Netherlands, Sweden, Norway and the U.K., Greiner said. Meta Group has identified these countries as the best-prepared, he said. Nations that Meta Group believes are most likely to experience Y2K-related problems include the Philippines, Russia, Thailand and Venezuela, he said.

Meta Group's research shows that more than 82 percent of the top 2,000 global firms have already experienced Y2K failures, Greiner said. And less than 20 percent of changed code has been tested, he said.

"There is a false sense of security," he said.

In addition, companies have focused on including the four-digits for the year to mitigate the year 2000 computer problems but have ignored the problems presented by the occurrence of leap year in 2000, he said.

However, Jack Walsh, the SEC's chief counsel at the office of compliance, inspections and examinations, said he was optimistic about the U.S. securities industry's preparedness. Walsh said he was not expecting any significant upsets to the U.S. financial markets or asset management firms at the turn of the century.

The SEC will be setting up a data communications center between Dec. 28 and Jan. 7 to collect Y2K performance data on the financial industry, Walsh said. The SEC will use this data to generate internal reports, a White House report and possible regulations, Walsh said.

"I personally volunteered to work the graveyard shift over the event weekend and will bring a very good book," said Walsh. "I am very optimistic about the securities industry's readiness. There has been a tremendous amount of effort in terms of remediation, testing and contingency planning. But I must say that I am cautiously optimistic, because, like anything else, there could be some minor problems."

Mutual fund companies should be prepared to employ fair asset value, should there be any disruptions to the financial markets, Walsh said. He also said it would be wise to know where all top executives and directors will be over the days preceding and immediately following New Year's.

The SEC's data communications center will monitor 35 mutual fund companies controlling about 75 percent of total assets under management, Walsh said. The commission will inform companies if they have been selected for monitoring, he said.

The SEC's data communications center will be willing to take phone calls from mutual fund companies, Walsh said. However, companies could obtain more accurate information about the state of the securities industry and how it is coping with Y2K on and before Jan. 1 by contacting market data vendors and the exchanges directly, Walsh said. The Investment Company Institute and the Securities Industry Association have also jointly set up a web site at, and the White House has a similar site:, Walsh said.