<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Susan Antilla</p> <p>The U.S. Securities and Exchange Commission may not look like a warm-and-fuzzy regulator to you, but to discerning investment advisers, it is as loveable as a government agency can be.</p> <p>The Boston Consulting Group said last week that, given the choice of having the Securities and Exchange Commission or a self-regulatory group such as the Financial Industry Regulatory Authority oversee them, investment advisers would take the SEC. In fact, they were so anxious to have the agency continue to be their watchdog that 59 percent said that even if SEC oversight cost them twice as much as Finra charged, they would prefer the SEC as their regulator.</p> <p>In a report in January, the SEC recommended three options to strengthen oversight of federally registered advisers, of whom there were more than 11,000 in 2010. Advisers could pay fees to fund more frequent inspections by the SEC; one or more self-regulatory organizations could examine advisers; or Finra, self-regulator for the brokerage industry, could do the job. Four adviser industry groups along with a unit of TD Ameritrade hired Boston Consulting to figure out how much each of the options would cost, and to do an online survey to get advisers’ views.</p> <p>The Boston Consulting researchers said it would cost between $240 million and $270 million a year to beef up oversight at the SEC, compared with as much as $610 million to have Finra do it, and as much as $670 million to have a new self-regulatory group take charge. In a statement, a Finra spokesman said the numbers were “wildly inflated” and noted that the project was “never a serious attempt” to figure out costs because Boston Consulting met with neither the SEC nor Finra to get data for the project.</p> <p>Ever since the SEC came out with its three options for regulating advisers almost a year ago, the interested parties have been sniping. Finra has argued it can use its existing experience with broker exams to get the job done. Its enemies say privately that Finra might over-regulate advisers out of deference to the brokerage firms who have long paid its bills. Amid the quarrels about cost and favoritism, there’s little talk about this: real investors who need protection from real crooks, many of whom already have wiggled past inept regulation by the SEC and Finra.</p> <p>(Susan Antilla is a Bloomberg View columnist.)</p> <p> </p> <p> </p> </body> </html>