Side-by-side management of funds presents thorny compliance issues for managers due to the inherent conflicts of interest they present and the temptation to benefit one fund at the expense of another.  Both the SEC and the U.K. Financial Conduct Authority (FCA) are keenly attuned to such issues.  The FCA recently issued a Final Notice imposing a financial penalty of £17.6 million on asset manager Aviva Investors Global Services Limited arising out of conflicts of interest and internal control failures related to its side-by-side management of fixed income hedge funds and long-only funds.  This article summarizes the firm’s internal controls failings, its specific violations of FCA regulations and the FCA’s calculation of the penalty it imposed.  For a recent example of an SEC enforcement action involving improper trade allocations, see “Hedge Fund Adviser Structured Portfolio Management Settles SEC Charges Relating to Improper Trade Allocations and Investor Disclosures,” Hedge Fund Law Report, Vol. 7, No. 36 (Sep. 25, 2014).  Cherry picking may even lead to federal criminal securities fraud charges.  See “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).