A Focus On Expense Allocations - Wells Fargo Prime Services

There has for some time been regulatory focus on both the manner in which fees and expenses incurred by investment advisers are allocated and the level of disclosure provided to investors regarding the nature and allocation of such expenses and potential conflicts of interest relating thereto. We have seen the majority of investment advisers pay close attention to this issue and develop detailed policies, procedures and internal controls to review and manage what has become an increasingly complex area. However, it remains a challenge in the industry and one that is not going to get easier to manage without significant infrastructure or external support.

The U.S. Securities and Exchange Commission has brought several cases against US investment advisers for alleged violations of the U.S. Advisers Act and has long expressed its concern regarding the proper allocation of expenses and in particular disclosure of conflicts of interest when entering into arrangements