In December 2020, the SEC entered a settled enforcement order against an alternative investment management firm that allegedly failed to disclose to investors that it had transferred top-performing traders from its flagship fund to a proprietary fund and replaced those traders with what the SEC claimed was a “replication algorithm” that underperformed the live traders. In what appears to be a follow-on action, the U.K. Financial Conduct Authority (FCA) recently imposed a significant penalty on the firm’s U.K. affiliate for its alleged violation of Principle 8 of the FCA’s Principles for Businesses, which requires supervised firms to manage conflicts of interest fairly. This article analyzes the FCA decision, with thoughts from Reed Smith partner Tim Dolan and Morgan Lewis partner William Yonge. For more on the SEC action, see “Manager Learns $170M Lesson: Replacing Successful Traders With Algorithms May Result in Significant Penalties Unless Properly Disclosed” (Jan. 28, 2021).