An adviser’s receipt of fees tied to the amount of client assets the adviser invests with a third-party asset manager creates a textbook conflict of interest. A manager recently fell into that trap when it was unable to persuade certain third-party asset managers to pay those fees directly to the manager’s affected clients and, instead, agreed to receive them directly. The manager compounded the problem by failing to disclose that arrangement to its affected clients or to recognize that its advisory agreements with those clients generally prohibited it from receiving compensation from outside managers. This article analyzes the recent SEC settlement order that resulted from those missteps. For another recent SEC action concerning the receipt of undisclosed compensation by an adviser, see “SEC Continues Scrutiny of Undisclosed Fees at Fund Managers” (Jun. 7, 2018).