On April 22, 2009, the Securities and Exchange Commission issued an order charging investment adviser Hennessee Group LLC and its principal, Charles J. Gradante, with violations of various federal securities laws for failing to perform due diligence before advising their clients to invest in the Bayou hedge funds, a fraudulent fund that later imploded.  Pursuant to the order, the Hennessee Group and Gradante settled the SEC’s accusations by agreeing to pay more than $814,000 in fines without being required to confirm or deny their guilt.  We explain the background and practical implications of the order.