Identifying and managing conflicts of interest is a fundamental fiduciary duty. In a recently settled enforcement proceeding, the SEC alleged that an investment adviser, along with its co-founder and CCO, breached that duty by failing to make adequate disclosures about investments by a private fund they advised into an affiliated business operated by the co-founder’s son. The respondents also allegedly violated the custody rule by failing to comply fully with the annual audit exception to the surprise custody inspection requirement. This article analyzes the alleged violations and the terms of the SEC’s settlement order. The settlement is an important reminder of the SEC’s expectations regarding robust and precise disclosures of all conflicts of interest; the need for effective compliance policies and procedures to ensure those disclosures; and the importance of strict compliance with the custody rule. See “Division of Examination’s 2021 Exam Priorities: Perennial Focus Areas for Private Fund Managers (Part Two of Two)” (Apr. 22, 2021); and our two-part coverage of the SEC’s risk alert on private funds: “Focus on Conflicts; Fees and Expenses; and MNPI” (Aug. 6, 2020); and “Key Takeaways for Managers” (Aug. 13, 2020).