Daniel B. Zwirn’s high-flying hedge fund management firm, D.B. Zwirn & Co., L.P. (DBZ), went into a death spiral in 2007 after Zwirn disclosed to investors certain improper inter-fund transfers that could have subjected one of the offshore funds to a significant U.S. tax liability and exposed the firm’s poor internal control systems. Zwirn blamed Perry A. Gruss, DBZ’s chief financial officer. The SEC apparently agreed, filing a civil complaint against Gruss in 2011, claiming that he had aided and abetted DBZ’s violations of the anti-fraud provisions of the Investment Advisers Act of 1940. In March 2017, the U.S. District Court for the Southern District of New York (Court) granted summary judgment to the SEC on its most serious charges. More recently, in May 2018, the Court entered a final judgment against Gruss, and the SEC subsequently issued a settlement order. This case highlights the need for fund managers to implement carefully crafted internal controls over critical matters like cash movement procedures and the risks of entrusting a single individual with authority over those functions. This article focuses on the details of the Court’s March 2017 opinion deciding the summary judgment motion and explores the terms of the final judgment and the settlement order. For more on internal controls, see “GLG Partners Settlement Illustrates SEC Views Regarding Valuation Controls at Hedge Fund Managers” (Jan. 16, 2014); and “SEC’s Recent Settlement With a Hedge Fund Manager Highlights the Importance of Documented Internal Controls When Managing Conflicts of Interest Associated With Asset Valuation and Cross Trades” (Jan. 9, 2014).