In its efforts to continue guiding private fund managers’ compliance practices, the SEC’s Division of Examinations recently published a risk alert (Risk Alert) identifying deficient practices observed in examinations. Fund managers should reference the Risk Alert when reforming their compliance practices in 2022, together with – and necessitated by – the slew of regulations proposed recently by the SEC. The major problems raised in the Risk Alert were analyzed in a recent ACA Group (ACA) webinar that featured senior adviser Dan Campbell. This second article in a two-part series evaluates issues raised in the Risk Alert around how managers perform throughout the diligence process, how they diligence service providers and their disclosure practices. The first article laid out deficiencies identified in the Risk Alert related to performance advertising, as well as misleading hedge clauses and poor management of side letters. For additional insights from ACA, see our two-part series: “The Evolution, Status and Future of RegTech in the Private Funds Industry” (Mar. 3, 2020); and “Using RegTech for Compliance Efforts and Potential Benefits of Emerging Technologies” (Mar. 10, 2020).