By Lisa Singhania
The Associated Press

NEW YORK - The debate over mutual fund reform intensified Thursday as state officials from New York, California and North Carolina pledged to use their financial clout to make funds disclose more information to shareholders. They also said new federal proposals must be tougher.

New York Comptroller Alan Hevesi, California Treasurer Phil Angelides and North Carolina Treasurer Rick Moore outlined reforms for mutual fund companies that want to do business with the state pension funds they control.

Those measures call for giving investors detailed breakdowns of fees, and hold managers and directors to strict standards of disclosure and behavior - or risk losing what collectively amounts to $400 billion in business.

They called on fund companies to comply with the proposals voluntarily, ahead of regulations, and said they will ask other states to join them.

For those who say "leave it to the marketplace how fees should be determined, how boards should function ... you're seeing it happen today," New York State Attorney General Eliot Spitzer said.

"This is pure and simple competition."

The announcement came a day after the Securities and Exchange Commission revealed its latest proposals to overhaul the scandal-plagued fund industry.

Since September, a growing number of fund firms and executives have been accused of improper trading and defrauding investors, while dozens of other organizations are under scrutiny by state and federal authorities.