While it is possible for a fund manager to legally receive loans from its fund, there is a tangled web of legal and compliance issues the manager needs to unravel along the way. Because of the level of attention directed to these transactions by the SEC, it is important that managers proceed carefully and with eyes wide open. To assist with this process, this two-part article series describes the types of loans that can arise from a fund to its manager, as well as important considerations for managers to keep in mind. This second article details various legal issues arising from these loans, including how they are treated under the Investment Advisers Act of 1940 and what fiduciary duties are owed to investors in these situations. The first article set forth certain examples of explicit and implicit loans that can trigger additional scrutiny, as well as steps managers can take in advance to secure authorization from their investors. For more on issues related to loans by funds, see “SEC Continues Pre-Action Probe of Stilwell Inter-Fund Loans” (Aug. 28, 2014); and “Recent SEC Enforcement Action Against Private Fund Manager Underscores Importance of Identifying and Understanding Money Transfers Between a Fund and the Manager During the Investor Due Diligence Process” (Jan. 26, 2012).