Democratic presidential hopeful John Kerry (search) outlined his plans on Thursday for cleaning up the mutual fund industry (search), saying the same tools prosecutors use to take down mobsters should be employed to fight "a new age of organized crime" in corporate offices.

Speaking to students at Northeastern University (search), the Massachusetts senator said the widely criticized practice of market timing should be made illegal to protect investors from being exploited.

The mutual fund industry has been reeling over the past two months as allegations of widespread market timing have surfaced. Market timing (search), a type of quick, in-and-out trading, is not illegal but is prohibited by many funds because it tends to skim profits from longer-term shareholders.

Massachusetts Secretary of State William Galvin was the first government regulator to formally accuse a mutual fund company of violating securities laws (search) when he brought a civil complaint against Boston-based Putnam Investments in late October.

"When this scandal came to light 10 weeks ago, it seemed like a few bad apples," Kerry said. "Now it's clear the whole orchard has been infected."

At least 15 mutual fund companies and 12 brokerage firms are now involved, Kerry noted.

Kerry put part of the blame on President Bush's economic strategy, which he called irresponsible and unfair.

"We can't create jobs unless we restore investor confidence in the markets," he said.

Kerry said he wants market timing to be made illegal, with tough civil and criminal penalties. He promised to set up a Mutual Fund Oversight Board (search) within the first 100 days of his presidency.

"The crimes being perpetrated by some mutual funds against millions of Americans need to be taken on the way we decided to take on the mob and organized crime just a few decades ago," Kerry said.

Galvin said Kerry has been a long-standing champion for investors. "I wholeheartedly support his plan to hold accountable the mutual fund industry for their actions and efforts to seek reimbursement for investors from losses," Galvin said.