Mrrroooeeewww..... Are the big cats of the fund industry sharpening their claws for Foliofn's bald one? This week both Charles Schwab and Fidelity shared that they are developing basket-based products that differ from Folios'. The moves may signal that they won't work with Steve Wallman's crew. Meanwhile, Merrill Lynch Funds' Terry Glenn barely disguised his contempt for the startup at a press luncheon held last week by the ICI.

Indeed, ICI President Matthew Fink told the gathered media that although "Steve Wallman may be trustworthy," Folio-type products need further regulation as future entrepreneurs may not be.

Merrill's Glenn added that Foliofn has "negligible" assets in its product and that alternatives to funds have yet to catch on with investors. When pressed for how he knew the information, Glenn declined to elaborate.

Wallman himself says that Glenn has no basis for any knowledge about Folios' business levels. He declined, though, to provide this information directly.

He also isn't fazed by the attack from the giants: "Compared to Merrill Lynch, and maybe Schwab, everyone's business is negligible," he quipped.

Wallman also took his luncheon address to the Securities Industry Association meeting this week as an opportunity to call for more flexible regulation to free innovation in the industry.

"Some incumbents rely on existing structures and regulations to try to slow, or stop, innovation," he told the gathered attendees. "But it's in all of our interests to work together for changes that will make the industry grow even faster," he added. He then called for "revolution in regulation, not just technology."

We doubt we've heard the last. 

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