In 2010, the SEC commenced an enforcement action in the U.S. District Court for the District of Connecticut (Court) against a hedge fund manager and two investment adviser entities that he controlled. The SEC alleged that the defendants had engaged in securities and investment adviser fraud by ignoring the investment strategy disclosed in certain fund offering documents, inflating the value of certain portfolio securities and diverting money from two of the funds they managed to cover the legal defense costs of three other funds. In August 2017, the Court issued a partial final judgment against the defendants on the SEC’s fraud claims, imposing an injunction, disgorgement totaling almost $8 million and a $5 million civil penalty. This article summarizes the terms of the judgment, drawing on insights from the manager’s hearing testimony and the parties’ submissions related to the SEC’s 2016 motion for summary judgment. See our three-part series on fee and expense allocation practices: “Practices Fund Managers Should Avoid” (Aug. 25, 2016); “Flawed Disclosures to Avoid” (Sep. 8, 2016); and “Preventing and Remedying Improper Allocations” (Sep. 15, 2016).