Owners of small funds finding their names disclosed on web.

If you value your privacy, be careful investing in small funds.

That's the lesson learned from the recent discovery by the Wall Street Journal that several mutual fund companies, including Los Angeles-based CNI Charter Funds (a unit of City National Corp.), inadvertently posted customers' account numbers and addresses on the Internet.

Mutual fund companies say they have little choice in the matter, as the Securities and Exchange Commission requires them to disclose the name, address and percent holding for any customer owning more than 5 percent of a class of mutual fund.

While the SEC said it does not require that individual account numbers be disclosed, the agency maintains that ownership names must be made available to prospective investors.

"Securities laws state that investors have a fight to know if there's a shareowner that can have a disproportionate influence on that security," said John Heine, a spokesman for the SEC. "It can come into play when one person liquidates his or her holdings, and it could substantially affect the share price."

But once information is filed with the SEC, it becomes public, as dozens of shareholders discovered last week. This has spurred some quick damage-control by banks and mutual funds.

"The very small number of clients whose account numbers were inadvertently disclosed in an SEC-required filing have been notified and are being issued new account numbers," said Cary Walker, spokesman for CNI Charter Funds. "No client accounts have been compromised."

The 5 percent rule has been in place since 1978, and was originally intended to apply to company stock, where a large shareholder could be in a position to impact the share price for everyone else. But in today's world of investment vehicles, the rule goes well beyond stock shares. Sources familiar with the SEC say that the commission is considering revising the rule during this year's review of disclosure rules. But for now, it stands.

The disclosure rule affects smaller mutual funds more than larger ones.

The CNI Corporate Bond Fund Class A, for example, only has $1.7 million in total net assets, according to the company's most recent prospectus posted on its Web site. So a shareholder like Chino-based Chino Glass & Glazing, with an investment of $128,000, managed to account for 7.5 percent of the fund--triggering a mandatory SEC filing and inclusion in the supplementary information to the funds' prospectus. The information is available on CNI Charter Funds' Web site. The owners of Chino Glass did not return calls.

Institutions usually register investments in "street name," which means a brokerage firm will buy the shares in its name on behalf of an investor. But individuals who choose to bypass brokerage account lees and buy shares directly from a mutual fund risk having their names disclosed.