Because financial statement audits provide important assurance to investors, it is no surprise that the SEC considers representations as to whether and when a fund is audited to be material. The SEC settled an enforcement proceeding against an investment adviser and its principal in which the regulator alleged that, from about July 2020 through late 2023, the defendants breached their fiduciary duty and falsely told investors and prospective investors in private funds they advised that the funds were subject to an annual audit by an independent auditing firm. Consequently, “investors in the [funds] were led to believe that there was a safeguard in place surrounding their investments – a third party audit – that did not exist,” claimed the SEC. This article discusses the SEC charges and the final judgments entered against the defendants. For discussion of a previous enforcement action involving the principal, see “SEC Sanctions Adviser for Undisclosed Conflicts and Misleading Form ADV” (Jun. 3, 2021).