When an investment adviser has a conflict of interest, it must, at minimum, make full and fair disclosure to affected investors. The SEC penalized an adviser and its principal for making inadequate disclosures to separately managed account (SMA) clients and private fund investors regarding compensation he received as an executive producer in connection with the adviser’s SMA and fund investments in the film production industry. The respondents also allegedly made a preferential redemption payment to a favored investor when the fund in question lacked sufficient liquidity to satisfy all pending redemption requests. This article details the alleged misconduct and the terms of the resolution, with commentary from Philip Moustakis, partner at Seward & Kissel. See “Identifying and Managing Common Conflicts of Interest” (May 9, 2024).