(Dow Jones) Investment advisors don't want a self-regulatory organization in their future, especially the Financial Industry Regulatory Authority.

A comment letter from the Investment Adviser Association to the Securities and Exchange Commission articulates that position. It supports ramping up regulatory examinations for advisors, but says that should be done by boosting funding for the SEC, which now oversees registered investment advisors.

The letter, written recently by David Tittsworth, executive director of the Washington, D.C.-based trade group, was in reaction to an earlier letter to the SEC from Richard Ketchum, FINRA's chairman and chief executive, who made less-than-subtle suggestions about the regulator's possible role as a future overseer of investment advisors.

The Dodd-Frank Act requires the SEC to study, by mid-January, the frequency of its investment-advisor examinations and whether one or more self-regulatory organizations can bolster the hard-pressed agency's efforts. The SEC currently examines registered investment advisors about once every 10 years. Some advisors have never been examined, say compliance professionals.

Ketchum and Tittsworth may agree on one point: Both of their organizations say that the SEC's current examination program for advisors won't do. It's their respective solutions that differ fundamentally.

The Investment Adviser Association has long called for bolstering the SEC's financial resources, including mechanisms that would allow the agency to fund itself through fees and fines. That ship, however, may have already sailed: The Dodd Frank Act doesn't include a self-funding mechanism. Congress approved an 11% budget increase for the agency, but a chunk of those funds could be consumed by agency's enhanced responsibilities required by the law, such as studies and rulemaking.

Ketchum's letter cites various examples of how self-regulatory oversight in general, and FINRA in particular, can be beneficial. It points to statistics on disciplinary hearings for the brokers and their firms that FINRA now oversees. Thomas Selman, executive vice president of regulatory policy at FINRA, also wrote to an SEC official in mid-November to offer advice about how an investment advisor examination program might be developed and implemented, among other things.

Tittsworth contends that the effectiveness of self-regulatory organizations hasn't been demonstrated. His group is also "concerned about the lack of transparency and accountability of non-governmental regulators," he wrote in an earlier letter in October.

The SEC has received 16 comment letters about its study. They include letters from the North American Securities Administrators Association, an organization of state securities regulators, and the Investment Company Institute, an industry group. Both oppose a self-regulatory organization for investment advisors.

SEC officials have also met with numerous groups about the issue, according to its website. They include representatives from FINRA, NASAA, and the Association of Institutional Investors, a trade group.

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