A former senior partner at Apollo Management, L.P. (Apollo) was accused of breaching his fiduciary duties by submitting his personal expenses – including travel to sporting events, a bachelor party and a wedding – as business expenses that were ultimately paid by Apollo-affiliated funds that he advised. The U.S. District Court for the Southern District of New York (District Court) found that Rashid was not liable under Section 206(1) of the Investment Advisers Act of 1940 (Advisers Act) because he was unaware that the funds – not Apollo – would pay his expenses. Instead, he was found liable under Section 206(2) of the Advisers Act, because he was “recklessly indifferent” as to which entity would pay for his expenses, and therefore negligent. On appeal, the U.S. Court of Appeals for the Second Circuit (Court) reversed the District Court’s decision on the basis that the former Apollo partner could not have reasonably foreseen that the funds would pay his expenses. This article summarizes the Court’s judgment and offers insights from industry experts interviewed by the Private Equity Law Report. For coverage of the District Court’s ruling, see “Court Fines Former Apollo Partner $240K for Misallocating Personal Expenses; Places ‘Significant Blame’ on Firm’s Internal Practices” (Jan. 19, 2021).