Having investment management firms examined by third-party firms is an idea fraught with danger, according to a former Securities and Exchange Commission director writing in a Wall Street Journal op-ed.

The idea has been advocated as a way to increase the number of exams beyond the current rate of 10 percent a year. SEC Chair Mary Jo White and the current director of the Division of Investment Management, David Grim, have said commission staffers are reviewing the concept.

But while more frequent exams is a worthy goal, private firms could botch the job, warned Norm Champ, the former investment management division director, in the Journal.

“The firms conducting the examinations would have a guaranteed revenue source with little incentive to produce quality exams or keep costs down,” Champ cautioned.

He pointed out other attempts at handing SEC oversight to private companies that failed.

An SEC mandate for rating agencies to vouch for the creditworthiness of corporate debt issuers before the financial crisis was problematic, he said, because the rating agencies, hoping to increase business, were likely too lenient with issuers paying them.

He also addressed the 2003 requirement that investment advisors had to participate in proxy votes on the stocks in their portfolios as part of their fiduciary duties, a requirement that demanded substantial time for research and evaluation. Those chores were largely outsourced to third-party firms that gave advice on managers on how to vote, and only a couple of firms had the proper scale to perform the duties. These firms became so powerful, and their recommendations estranged from shareholder interest, he said, that the SEC has found it necessary to curb their influence.