Advisers that are not scrupulous in how they present performance results to investors may face potentially dire consequences. See “OCIE Director Andrew Bowden Identifies the Top Three Deficiencies Found in Hedge Fund Manager Presence Exams and Outlines OCIE’s Examination Priorities” (Oct. 10, 2014). In an extreme example of a hedge fund manager providing investors with misleading performance information, the SEC recently settled an enforcement action against an unregistered investment adviser that, among other things, presented investors with a “misleading mixture of hypothetical and actual returns when providing the fund’s performance history” without adequate disclosure. This article provides an overview of the facts, the SEC’s allegations and the settlement terms. For another case involving improper performance advertising, see “SEC Settles Enforcement Action and Pursues Company Over Use of Backtested Performance Data” (Jan. 8, 2015).