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TECHNOLOGY


As the SEC moves closer to adopting online security and privacy regulations, several fund companies are having their websites evaluated, audited and certified to insure they are compliant with regulations and to ease investors' concerns regarding online privacy, fund executives said.

Since December, at least five mutual fund companies have undergone or are in the process of getting an evaluation of their websites by PriceWaterhouseCooper of New York. The firms are Phoenix Investment Partners of Hartford, Conn., INVESCO of Denver, Colo., Van Kampen Mutual Funds of Oakbrook Terrace, Ill., and Putnam Investment Management of Boston, according to PriceWaterhouseCooper.

The program evaluates each website on several criteria relating to online sales terms, privacy, security and customer complaints. Although fund companies are ultimately responsible for complying with the SEC's online regulations, PWC's criteria meet requirements of the Graham-Leach -Bliley Act and should meet any rule adopted by the SEC on privacy issues, according to Mary Anne Murphy, the partner with PriceWaterhouseCoopers in charge of its so-called "BetterWeb" program.

Under the program, visitors to certified sites can click on the BetterWeb seal to see all of the company's policies regarding the criteria outlined in the program.

The Graham-Leach-Bliley act and the SEC's adoption of online privacy rules could explain some of PriceWaterhouseCoopers success in attracting mutual fund companies to the program.

"Everyone, the SEC and the Federal government, is getting more concerned with privacy standards and it's understood that you are not alone on the web," said Steve Messinger, senior vice president and director of e-commerce and strategic planning at Van Kampen. "We didn't know there was a specific rule or legislation coming along, but we had an idea that this was the direction things were going."

While other accounting firms offer e-commerce consulting services, only the American Institute of Certified Public Accountants of New York and PriceWaterhouseCoopers offer certification programs that include a certificate of approval.

The AICPA's program, CPA WebTrust, audits websites every 90 days for issues relating to safety of online transactions and the protection of confidential customer information. While the organization's seal can be found on a couple of banks' and other financial service companies' websites, there are no mutual fund companies that have used the service, according to Sheryl Weiner, the senior technical manager for the program.

PriceWaterhouseCoopers' success in attracting fund companies is partially due to its ability to parlay its accounting business into the e-consulting business, according to Norman Welch, a CPA with Welch & Associates of Baton Rouge, La. He was licensed to sell AICPA's program to fund companies but after a year gave up because it was too difficult.

Phoenix Investments decided to participate in PWC's BetterWeb program because of the company's previous relationship with the firm, according to Michael Kearney, senior vice president of Phoenix's information technology department.

But investor's online security and privacy concerns are the primary reasons the program has enjoyed early success, according to Murphy of PriceWaterhouseCoopers. Sixty-four percent of consumers do not trust websites to keep their personal information private and only three percent say they usually feel comfortable providing credit information online, Murphy said, citing surveys conducted late last year by Jupiter Communications of New York and AT&T Laboratories of Murray Hill, N.J.

Providing peace of mind to potential online investors when they visited Van Kampen's site played a significant role in the company's decision to enter the BetterWeb program, according to Messinger. Before the company included the certificate on its site, the company would often get e-mail asking what the company's privacy and security policies were. The certificate has reduced the number of e-mails requesting that information, he said.