As evidence of its continuing focus on conflicts of interest and their proper disclosure, the SEC recently settled an enforcement action with a registered investment adviser.  See “Conflicts Remain an Overarching Concern for the SEC’s Asset Management Unit,” Hedge Fund Law Report, Vol. 8, No. 10 (Mar. 12, 2015).  A client of the investment adviser made a significant loan to one of the adviser’s executives.  The investment adviser subsequently entered into several transactions that involved the client/lender and other advisory clients without disclosing the existence of that loan to the other clients.  This article summarizes the transactions that gave rise to the SEC’s enforcement action, the investment adviser’s alleged violations and the outcome of the action.  For an overview of the types of conflicts of interest faced by hedge fund managers, see “Identifying and Addressing the Primary Conflicts of Interest in the Hedge Fund Management Business,” Hedge Fund Law Report, Vol. 6, No. 3 (Jan. 17, 2013).  For discussion of a recent enforcement action involving potential conflicts of interests created by the private business interests of a portfolio manager, see “SEC Settlement Highlights Circumstances in Which Hedge Fund Managers Must Disclose Conflicts of Interest,” Hedge Fund Law Report, Vol. 8, No. 16 (Apr. 23, 2015).  Although this matter involved a loan from an adviser’s client to an executive of the adviser, a more common conflict of interest arises when a fund makes a loan to one of its principals; see, e.g., “Important Implications and Recommendations for Hedge Fund Managers in the Aftermath of the SEC’s Settlement with Philip A. Falcone and Harbinger Entities,” Hedge Fund Law Report, Vol. 6, No. 33 (Aug. 22, 2013).