In a recent administrative proceeding, the SEC claimed that two registered investment advisers caused the mutual funds they advise to violate Section 12(d)(1) of the Investment Company Act of 1940, which limits an investment company’s ownership of other investment companies. One adviser compounded its problems by failing to implement its own policies and procedures, as well as those of the funds it advised. This article analyzes the alleged violations and the terms of the SEC settlement order. Although the settlement concerns open-end investment companies, it is an important reminder that the SEC carefully scrutinizes advisers’ compliance with investment restrictions, whether those restrictions are internal or imposed by statute. See “Adviser Faces Significant Fines and Disgorgement for Misrepresentations Concerning Investment Concentration and Risk Controls” (Jun. 11, 2020).