Item 5. Fees and Compensation
Clear Harbor offers its services on a fee basis which generally includes fees based upon assets under
management and/or the performance of the client’s portfolio.
Financial Planning and Consulting Fees
Although Clear Harbor currently does not charge fees for the financial planning and consulting services
it provides to its clients, the Firm may, in the future, charge a fixed fee for these services. These fees would
be negotiable and largely determined by the level and scope of the agreed upon services.
If the client receiving financial planning and/or consulting services for a fixed fee engages Clear Harbor
for additional investment advisory services, Clear Harbor may offset all or a portion of its fees for those
services based upon the amount paid for the financial planning and/or consulting services.
Prior to engaging Clear Harbor to provide financial planning and/or consulting services, the client is
required to enter into a written agreement with Clear Harbor setting forth the terms and conditions of the
engagement.
Investment Management Fee
In the event the client determines to engage Clear Harbor to provide investment management services,
Clear Harbor does so on a fee basis. Clear Harbor charges an annual fee based upon a percentage of
the market value of the assets being managed by Clear Harbor. Clear Harbor’s annual fee is exclusive
of, and in addition to, brokerage commissions, transaction fees, and other related costs and expenses
which are incurred by the client. However, Clear Harbor does not receive any portion of these
commissions, fees, and costs.
Clear Harbor’s annual fee is prorated and charged quarterly, in arrears or in advance, depending on the
selected adviser. Fees charged in arrears will be calculated based upon either the average daily balance
of the assets (if the custodian for those assets provides software for making the calculation), average
month-end balance of the assets, or the value of the assets on the last day of the previous quarter. Fees
charged in advance will be calculated based upon the total market value of the assets under management
at either the opening of business on the first business day of each quarter or on the last day of the previous
quarter. The annual fee varies (between 0.25% and 1.5%) depending upon the market value of the
assets under management and the type of investment management services to be rendered.
Clients are advised that a conflict of interest exists for the Firm to recommend that clients engage Clear
Harbor for additional services for compensation, including rolling over retirement accounts or moving other
assets to the Firm’s management. Clients retain absolute discretion over all decisions regarding
engaging the Firm and are under no obligation to act upon any of the recommendations.
Clear Harbor, in its sole discretion, may negotiate to charge a lesser management fee based upon certain
criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar amount of assets
to be managed, related accounts, account composition, pre-existing client, account retention, pro bono
activities, etc.).
Performance Fee
As further discussed in response to Item 6, Clear Harbor renders investment management services to
qualified clients for a performance-based fee in accordance with the requirements set forth in applicable
laws, rules, and regulations. For those clients, Clear Harbor charges its fees based upon a percentage of
the market value of the assets being managed by Clear Harbor (“base fee”) in addition to a fee based on
the performance of the account (“performance fee”).
Clear Harbor charges a performance fee up to twenty percent (20%) of the net gains in a client’s portfolio
subject to a high-water mark as detailed in the investment management agreement. Clear Harbor also
charges a base fee of up to one percent (1%) of the market value of the assets under management.
Clear Harbor’s annual base fee is prorated and charged quarterly, in arrears, based upon the market
value of the assets on the last day of the previous quarter. Clear Harbor’s performance fee is charged
annually in arrears.
Fees for Investing in the Fund
For investments in Spectrum Value Partners, LP, Clear Harbor charges its base fee in addition to a fee
based on the performance of the Fund (“performance fee”). Clear Harbor’s performance fee is twenty
percent (20%) of the net performance of the fund, subject to a loss carryforward provision, in addition to a
base fee of up to one percent (1%). Clear Harbor’s annual base fee for the Fund is prorated and charged
quarterly in arrears, based upon the market value of the assets on the last day of the previous quarter.
Clear Harbor’s performance fee shall be charged annually in arrears.
Clients invested in the Fund will pay built in fees and expenses applicable to the investment as described
in the Offering Documents. Further information regarding these fees is disclosed in the Offering
Documents. Clear Harbor, in its sole discretion, may negotiate to charge a lesser management fee based
upon certain criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar
amount of assets to be managed, related accounts, account composition, pre-existing client, account
retention, pro bono activities, etc.). Clear Harbor may also waive or reduce fees for its employees and their
related accounts. Investment in the Fund is not suitable for all of our clients; investors must meet certain
suitability standards and minimum investment requirements.
Fees for managing Private Funds creates an incentive for Clear Harbor to invest client assets in higher risk
strategies because they have potential for higher advisory fees to the Firm.
Third Party Advisor Program Fees
Fees and billing methods are outlined in each respective TPA’s Brochure and Advisory Contract. Clients
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