Wells Fargo announced a top notch deal on Friday announcing that it has agreed to acquire the midsize prime brokerage operations of Merlin Securities.  This makes Wells the last of the nation’s biggest banks to enter the lucrative world of prime brokerage, which services hedge funds and other alternative asset management firms. Hedge funds often rely on prime brokers to manage their cash, execute leveraged trades and lend securities so they can short sell. As the hedge fund industry has proliferated - quadrupling its assets under management over the past decade, Wall Street rushed in to acquire prime brokerage operations.  Goldman Sachs, JPMorgan and Morgan Stanley are just 3 of the many top named firms that operate major prime brokerage units. While Goldman JPMorgan and M. Stanley went into Prime Brokerage, Wells Fargo was positioning itself as one of the nation’s largest home mortgage lenders - which is why it missed out on the boom.  Wells Fargo Bank features a far smaller investment bank than most of its big Wall Street rivals, opting to cater more to consumers than corporations and hedge funds. Acquisition of Merlin a Midprime Broker. Notwithstanding its late entry, the acquisition of Merlin offers Wells a significant opportunity to broaden its business.  John Shrewsberry, head of Wells Fargo Securities, the firm’s investment banking business, said in a statement:  “This transaction enhances our ability to meet customer needs and generate earnings for our shareholders, all while adhering to our disciplines of prudent risk management and controlled growth.” Terms of the deal were not disclosed and, before it can become final, the deal must get the blessing of the regulators.  Anticipating that all goes well, Wells Fargo expects to close the takeover in Q3 of 2012. Merlin has some 500 clients that come with the deal - largely hedge funds. The company, based in both San Francisco and New York, is known as a midprime broker, meaning it does not serve the heaviest hitters in the hedge fund world.  Merlin focuses mainly on the equity markets, but Wells Fargo would like to expand the list of services to fixed-income and commodities trading.  Wells Fargo also will inherit Merlin’s roster of roughly 100 employees - who bring to the table extensive experience and expertise. Merlin was advised by Greenhill & Company and the law firm Arnold & Porter. Wells Fargo Securities was its own financial adviser and Morgan Lewis was its legal counsel. For further details, go to:  [Dealbook, 4/27/12].