WASHINGTON The SEC is hatching a plan that could subject money managers to an expensive new layer of regulatory oversight.
Instead of just the Securities and Exchange Commission looking over their shoulders, managers could be regulated by a self-regulatory organization, or SRO, said David Tittsworth, executive director of the Investment Adviser Association, a Washington trade group.
Mr. Tittsworth believes the Financial Industry Regulatory Authority (formerly the National Association of Securities Dealers Inc.), which already regulates broker-dealers, will be the SRO of choice. In fact, he said FINRA executives have been working behind the scenes to get SEC staffers behind the proposal.
FINRA is licking its chops over the possibility of becoming the SRO for investment advisers. Mr. Tittsworth said at a recent conference in Washington sponsored by the IAA and IA Week, a trade publication.
SEC Chairman Christopher Cox, believing that regulations governing investment advisers and broker-dealers need a facelift, assigned an agency task force to recommend options to him by May 5.
Its certainly an option this SEC task force is actively considering, Mr. Tittsworth said. Were taking this all very seriously.
Members of Mr. Tittsworths organization vehemently oppose that proposal. The SEC has done a very good job regulating advisers, said Henry H. Hopkins, IAA chairman and general counsel of T. Rowe Price Associates Inc., Baltimore. If its not broken, dont fix it.
John Heine, SEC spokesman, said officials there would not comment on the matter.
Herb Perone, a FINRA spokesman, said, FINRA is not going to engage in an unproductive back and forth with people whose paranoia has trumped their common sense. But he would neither confirm nor deny that the organization is lobbying to be the SRO for money managers.