It is common for a PE sponsor to install one or multiple employees on the board of a portfolio company post-acquisition for the purpose of overseeing its operations and managing the sponsor’s investment. Although the practice offers obvious benefits to PE sponsors, it also introduces various potential conflicts of interest and other risks that CCOs need to zealously guard against. One notable risk is that the PE sponsor will inappropriately act on material nonpublic information (MNPI) about a portfolio company that is obtained via the employee on its board of directors. A similar issue arose recently in an SEC enforcement action against Ares Management LLC (Ares), which failed to establish and implement written policies and procedures reasonably designed to prevent the misuse of MNPI. Although the SEC did not find any evidence of Ares misusing MNPI or otherwise performing insider trading, the Commission nevertheless pursued the enforcement action and imposed a $1‑million fine. This article analyzes the SEC’s settlement order, along with relevant takeaways and insights for PE sponsors. For additional commentary on insider trading controls, see “ACA 2019 Compliance Survey Covers Annual Meetings, Insider Trading Controls and Common Compliance Program Issues (Part Two of Two)” (Jul. 16, 2019); and “ACA 2018 Compliance Survey Covers SEC Exam Experience and Insider Trading Controls (Part One of Two)” (Dec. 13, 2018).