Ensuring appropriate valuations is one of a fund adviser’s core compliance duties. The SEC expects advisers to adopt and implement appropriate valuation policies and procedures and to ensure appropriate supervision of third parties to which the adviser delegates any valuation duties. In a recently settled enforcement proceeding against an investment adviser, the SEC alleged that the adviser failed on both counts. First, the adviser allegedly failed to implement its own compliance policies, which required it to review the reasonableness of the daily pricing of a mutual fund’s portfolio. Second, it failed to adopt any policies with regard to oversight of its sub-adviser, to which the adviser had delegated valuation duties. The proceeding is a critical reminder that all advisers must actually implement the policies that they adopt and adopt appropriate policies for overseeing third parties to which they delegate their responsibilities. This article details the facts and circumstances that led to the proceeding and the terms of the settlement. See “HFLR Program Explores Valuation of Illiquid Assets and Valuation Governance” (Jan. 28, 2021); as well as our two-part valuation series: “Crises May Require Deviation From Usual Procedures” (Nov. 5, 2020); and “Five Steps to Take When Deviating From Usual Procedure” (Nov. 12, 2020).