In recent years, the SEC has closely focused on the allocation of expenses between private fund managers and the funds they manage. See “Dechert Global Alternative Funds Symposium Highlights Trends in Hedge Fund Expense Allocations, Fees, Redemptions and Gates,” Hedge Fund Law Report, Vol. 8, No. 20 (May 21, 2015). In an enforcement action presaged in a May 2015 speech by Marc Wyatt, acting director of the SEC’s Office of Compliance Inspections and Enforcement, the SEC has charged a registered investment adviser with fraud for allocating broken deal expenses to its flagship private equity funds, while failing to disclose to investors in those funds that it did not allocate any such expenses to co-investors in the deals. See “Acting OCIE Director Discusses the Office’s Focus on Private Equity Managers and Emphasizes the Importance of Disclosure by Advisers,” Hedge Fund Law Report, Vol. 8, No. 21 (May 28, 2015). The SEC also claimed that the adviser failed to maintain policies and procedures governing such allocations. Without admitting or denying the SEC’s allegations, the adviser has agreed to a settlement order with the SEC. This article summarizes the factual background of the enforcement proceeding, the SEC’s specific charges and the terms of the settlement. For discussion of other recent enforcement actions involving expense allocations by private equity managers, see “Enforcement Action against Private Equity Fund Manager Highlights Five Aspects of the SEC’s Thinking on Allocation of Expenses,” Hedge Fund Law Report, Vol. 7, No. 36 (Sep. 25, 2014); and “SEC Order Suggests That Private Fund Operating Expenses Should Be Allocated Based on Line-by-Line Determinations Rather Than an Across-the-Board Percentage Split,” Hedge Fund Law Report, Vol. 7, No. 9 (Mar. 7, 2014). For a discussion of the statutory framework governing expense allocations, the consequences of improper allocations and best practices for expense allocations, see “Battle-Tested Best Practices for Private Fund Expense Allocations,” Hedge Fund Law Report, Vol. 7, No. 38 (Oct. 10, 2014). For more on expense allocations, see “How Should Hedge Fund Managers Approach the Allocation of Expenses Among Their Firms and Their Funds? (Part Two of Two),” Hedge Fund Law Report, Vol. 6, No. 19 (May 9, 2013).