The SEC has clearly communicated its commitment to scrutinizing how hedge fund managers are identifying and managing conflicts of interest specific to their businesses.  See, e.g., “Davis Polk ‘Hedge Funds in the Current Environment’ Event Focuses on Establishing Registered Alternative Funds, Hedge Fund Manager M&A and SEC Examination Priorities,” Hedge Fund Law Report, Vol. 5, No. 24 (Jun. 14, 2012).  One of the conflicts most commonly cited by the SEC is the fair and equitable allocation of investment opportunities by a hedge fund manager among its clients and proprietary accounts.  The SEC’s concern with conflicts raised by allocations has been emphasized in speeches, letters and compliance outreach programs; and is evidenced by an enforcement action recently commenced by the SEC against an investment advisory and hedge fund management firm and its principal.  This article summarizes the allegations, charges and relief sought in the SEC’s complaint.  See also “How Can Hedge Fund Managers Avoid Criminal Securities Fraud Charges When Allocating Trades Among Multiple Funds and Accounts?,” Hedge Fund Law Report, Vol. 4, No. 19 (Jun. 8, 2011).