Expense allocation and valuation practices of private fund managers remain hot-button issues for the SEC because they directly affect fund investors. In a recent settlement, the SEC claimed that a registered investment adviser that served as adviser to two business development companies (BDCs) improperly allocated rent, employee salaries and other overhead expenses to those companies and overvalued certain of their assets, all as a result of deficient policies and procedures. Although the settlement concerns a BDC adviser, it serves as a valuable lesson for private fund advisers, which must also adopt and implement clear expense allocation and valuation policies and practices and adhere to them scrupulously. This article analyzes the order. See “OCIE Risk Alert Warns of Six Most Frequent Fee and Expense Compliance Issues” (May 3, 2018).