The SEC recently accused an audit firm of engaging in improper professional conduct in connection with its audits of certain private funds. A fund adviser used an unorthodox valuation model that overvalued its assets, which mainly consisted of structured notes. The auditor allegedly staffed audit teams with individuals who were not competent to conduct audits of funds whose primary assets were structured notes, or to understand and evaluate the manager’s valuation methodology. Although it appears that the fund manager may have intended to deceive the auditor and was separately investigated and charged by the SEC, the SEC’s settlement with the auditor is a reminder that fund managers must ensure that their auditors are actually qualified and staffed properly. This article analyzes the auditor’s alleged shortcomings and the terms of the settlement order. For another SEC proceeding involving alleged professional misconduct by the auditor, see “Lack of Auditor Independence Continues to Plague Advisers Under the Custody Rule” (Sep. 26, 2019).