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LTD paid INC to maintain investments placed in the Currency
Fund. LTD charged its clients a 3-percent placement cost plus an
annual management fee, starting with the second year, of 1.00
percent of the value of the assets under management.
Accordingly, the arm’s length charge for INC’s services for that
operation is the amount of clients’ newly placed net assets times
3 percent plus the amount of clients’ already placed net assets
times 1.00 percent.
LTD paid INC to maintain investments placed in the FEIM
Fund. LTD charged its clients a placement cost based on a
sliding scale of 4.00 percent to 0.25 percent, depending upon the
amount of the investment. LTD also charged an annual management
fee, starting with the second year, of 1.00 percent of the value
of the assets under management. Petitioners did not present
evidence on and the record does not reveal the precise amounts of
clients’ funds at each level of the graduated placement costs.
Consequently, we are unable to calculate LTD’s FEIM Fund
commission on a sliding scale. We note that Deloitte used in its
audit a figure of 3.00 percent, and we apply that amount in the
instant case. Accordingly, the arm’s length charge for INC’s
services for that operation is the amount of clients’ newly
placed net assets times 3.00 percent plus the amount of clients’
already placed net assets times 1.00 percent.
LTD paid INC to maintain investments placed in the Inversat
Fund. LTD charged its clients a placement cost based on a
sliding scale of 3.50 percent to 0.25 percent, depending upon the
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