The fee and expense practices of private fund managers and other investment advisers are a perennial target of SEC scrutiny. See “Self-Reporting and Remedying Improper Fee Allocations May Not Be Sufficient for Fund Managers to Avoid SEC Action” (Sep. 15, 2016); and “Undisclosed Increase in Investment Adviser’s Fees Could Result in Significant Penalties” (Jun. 23, 2016). In two recent enforcement actions, the SEC alleged that Citigroup Global Markets, Inc. (CGMI) and Morgan Stanley Smith Barney, LLC (MSSB) overbilled advisory clients and failed to preserve customer records. MSSB was also charged with violating the custody rule under the Investment Advisers Act of 1940. While the operations of asset management behemoths MSSB and CGMI are infinitely more complicated than those of many hedge fund advisers, the settlements are a timely reminder that fund advisers must have adequate policies and procedures to ensure that the fees assessed against investors and clients adhere to the disclosures made in fund offering documents, investment management agreements and any side letters. Advisers are also encouraged to consider whether their own policies and procedures are designed to identify the sorts of deficiencies outlined by the SEC in MSSB’s and CGMI’s policies and procedures. This article summarizes the nature of the violations and the terms of both settlements. For more on fee and expense allocation practices, see our three-part series: “Practices Fund Managers Should Avoid” (Aug. 25, 2016); “Flawed Disclosures to Avoid” (Sep. 8, 2016); and “Preventing and Remedying Improper Allocations” (Sep. 15, 2016).