In its 2020 Examination Priorities, the SEC’s Office of Compliance Inspections and Examinations (OCIE) put investment advisers on notice that policies and procedures to prevent violations of the Investment Advisers Act of 1940 – especially those that concern fees and expenses – are a current focus area. In addition, OCIE emphasized that it will often assess the adequacy of disclosures relating to core areas reviewed, including fees and expenses. Those hot-button issues identified by OCIE were all the subject of recently settled SEC enforcement proceedings against an investment adviser for misallocating certain costs and expenses between its real estate funds and co‑investment vehicles managed by the adviser; failing to make proper disclosures about those costs and expenses; and having inadequate policies and procedures. The SEC’s cease-and-desist order (Order) serves as a reminder to all PE and real estate managers that the SEC takes expense allocations very seriously. This article analyzes the Order and summarizes its key takeaways. See “PLI Panel Discusses 2020 OCIE Priorities and Tips for Fund Managers to Navigate an Examination (Part One of Two)” (Apr. 7, 2020); and “2020 OCIE Exam Priorities Include New Emphasis on Compliance Programs; Retail Investors Remain Top Focus” (Feb. 25, 2020).