In connection with a take-private transaction, an investment adviser reached an agreement to allow a consortium of third-party equity co‑investors to avoid bearing expenses for a credit facility used to finance the transaction. Instead, the consortium’s share of expenses was allocated to the adviser’s PE fund, without disclosing to the fund or its LP advisory committee that the fund would bear a proportion in excess of its investment allocation. The SEC deemed those efforts to be an “undisclosed, disproportionate” allocation in an enforcement action against the adviser, while also citing the adviser’s failure to implement written compliance policies and procedures designed to prevent violations of the Investment Advisers Act of 1940. This article summarizes the relevant facts and terms of the cease-and-desist order (Order), along with insights from industry experts about key takeaways from the Order. For coverage of another SEC action involving misallocations to co‑investors, see “Expense Allocation Issues May Place Real Estate Managers in SEC Crosshairs” (Sep. 22, 2020).