The SEC’s Office of Compliance Investigations and Examinations recently issued a Risk Alert to highlight risks and issues associated with advisory fees and expenses. Advisers who do not review and adjust their practices in light of these risk factors could face deficiency letters or enforcement referrals by SEC staff. The risk alert highlighted several areas, including findings that advisers incorrectly valued certain assets in client accounts resulting in overbilled advisory fees. In one example, the adviser used the asset’s original cost to value an illiquid asset rather than valuing the asset based on its fair market value. The staff also found that advisers applied incorrect fee rates to clients, inaccurately disclosed advisory fees, and misallocated adviser expenses. In response to OCIE staff’s observations, some advisers have changed their practices, enhanced policies and procedures, and reimbursed clients by the overbilled amount of advisory fees and expenses, according to the alert.