Potential conflicts of interest in a co‑investment arrangement rarely raise actionable concerns when an asset is performing. Harder questions from investors surface, however, when a deal is stressed – e.g., when a portfolio company needs rescue financing; when a down round dilutes earlier investors; or when a sponsor must decide whether its main fund and a co‑investment vehicle will be treated identically on exit. At those moments, a sponsor’s pre-commitment disclosures, written policies, conflicts-clearing mechanisms and written compliance records determine whether it can satisfy scrutiny from both its investors and the SEC. Those pressure points framed a MyLawCLE program about PE co‑investments featuring Willkie Farr partners Debra Franzese and Larissa R. Marcellino. This article parses the panelists’ insights on the conflict architecture of co‑investment structures; the side letter terms that allocate rights between a main fund and one or more co‑investors; common disclosure and compliance failures that draw SEC attention during examinations; and best practices that sponsors can adopt to withstand scrutiny. See our two-part series on co‑investment equity commitment letters: “Rising Prominence and Role in the Co‑Investment Process” (May 29, 2025); and “Key Terms and Negotiating Positions” (Jun. 12, 2025).