Private fund managers, including hedge fund managers, often hire investment consultants to help evaluate investments; analyze an investment target company’s operations, management and financial condition; offer strategic and structuring advice; and provide related services. To provide value, such consultants typically request and receive deep access to confidential target company data. The company typically grants such access under the terms of a confidentiality agreement between the company and the consultant, or among the company, the consultant and the private fund manager. Typically, the primary purpose of such confidentiality agreements is to prevent confidential company information from reaching a competitor or from being used by the consultant on behalf of a competitor. A secondary purpose of such agreements is to prevent insider trading by “temporary insiders” or their tippees, or Regulation FD violations by the company. However, an enforcement action recently filed by the SEC suggests that confidentiality agreements, standing alone, may not be sufficient to prohibit insider trading by investment consultants. While the private fund manager involved was not charged, the charges against the manager’s consultant reflect adversely on the manager. The charges suggest, for example, that the manager did not take adequate precautions to control the conduct of the consultant. Given the radioactivity of insider trading charges in the current enforcement environment, risk aversion with respect to insider trading is prudent business. This article discusses the SEC’s factual and legal allegations in the matter, as well as the consultant’s proposed settlement agreement. This article also details four steps that private fund managers may take to prevent insider trading by their investment consultants.