Like many Americans, Ken Winterhalter wants the financial industry to pay for its past recklessness. His favored punishment, however, isn’t jail time for CEOs or bigger corporate fines.

Instead, the president of Twin Rivers Paper Co. has zeroed in on something a bit closer to home: stopping a U.S. Securities and Exchange Commission plan that would spur more investors to get mutual fund reports online.

“After the nightmare of the meltdown in 2007 where millions of shareholders watched their holdings evaporate, Wall Street must remain accountable with paper statements and printed information,” Winterhalter wrote to the agency after it made the proposal last year.

Winterhalter’s Madawaska, Maine, company, which manufactures McDonald’s french fry bags, prescription drug inserts and, yes, a thin paper used for mutual fund documents, doesn’t typically wade into financial regulation. Yet, its campaign has won support from lawmakers and has been embraced by an unusual collection of allies, including postal workers’ unions, AARP and consumer groups.

Pleading Case

The effort has put mutual funds on the defensive, forcing them to plead their case for the change to SEC commissioners and buy advertisements touting the plan’s environmental benefits. Costs for printing and mailing are borne by investors. Going digital would save them some $200 million annually and preserve millions of trees, the fund companies say.

Few thought the SEC’s electronic delivery push, part of a broader proposal to modernize fund regulations, would be controversial. The battle has been both bizarre and bruising, with the two sides trading accusations of hidden agendas and creative use of statistics while squabbling over issues such as whether elderly people can input a lengthy web address. SEC Chair Mary Jo White has yet to schedule a vote on a final rule.

Most of the SEC’s disclosure requirements were issued long before people started using smartphones, or even e-mail. While investors and businesses generally agree that the agency should move faster into the digital age, the dust-up over the mutual fund documents is a cautionary tale of how difficult that can be.

Radical Changes

“Why are we having a debate about whether we should be sending reports out on paper?” said Tom Quaadman, senior vice president at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, which supports the digital proposal. “If you sit down and think about this for a few minutes, there are radical changes coming in the next five years.”