The SEC has repeatedly emphasized the importance of proper disclosure of conflicts of interest to clients and fund boards.  In a recent speech, Julie M. Riewe, Co-Chief of the Asset Management Unit (AMU) of the SEC’s Enforcement Division, emphasized the continued focus of the AMU on conflicts of interest and postulated that the AMU would recommend a number of conflicts cases for enforcement action, including cases relating to undisclosed business activities.  See “Conflicts Remain an Overarching Concern for the SEC’s Asset Management Unit,” Hedge Fund Law Report, Vol. 8, No. 10 (Mar. 12, 2015).  This week, the SEC issued an order charging a registered investment adviser, along with its then-chief compliance officer, with breaching their fiduciary duties by failing to disclose a conflict of interest created by the outside business activity of one of the adviser’s top-performing portfolio managers and failing to disclose a breach of the adviser’s private investment policy by that portfolio manager.  This article provides a discussion of the SEC order and settlement, including the violations that the SEC claimed against the adviser and former chief compliance officer, then highlights the implications of the order for the hedge fund industry.  For another recent SEC enforcement action involving conflicts of interest, see “SEC Settlement Emphasizes the Importance – and Limits – of Fund and Transaction Disclosure,” Hedge Fund Law Report, Vol. 8, No. 13 (Apr. 2, 2015).