On April 12, 2018 the SEC, Office of Compliance Inspections and Examinations (“OCIE”) published a risk alert with an overview of the most frequent advisory fee and expense compliance issues identified in examinations of investment advisers.

The publication of the risk alert indicates that the SEC continues to pay specific attention to the methods in which investment advisers calculate and charge advisory fees and expenses and whether or not these methods map back to disclosures made to clients.

OCIE specifies that the most frequent issues related to advisory fees and expenses have to do with:

• Fee billing based on incorrect account valuation
• Billing fees in advance or with improper frequency
• Omission of rebates and applying discounts incorrectly
• Disclosure issues related to advisory fees and
• Misallocation of adviser expenses

OCIE “encourage(s) advisers to assess their advisory fee and expense practices and related disclosures to ensure that they are complying with the Advisers Act, the relevant rules and their fiduciary duty, and review the adequacy and effectiveness of their compliance program.”

Please contact Uzi Rosha if you have any questions regarding this risk alert.