Despite a fund manager’s best efforts, violations of the securities laws may still occur. How the manager responds when it discovers those violations, however, can have a profound impact on the consequences it may face. For example, if the manager voluntarily reports the violations to the SEC; takes appropriate remedial steps to correct the violations and prevent future infractions; and cooperates with the SEC staff, it may avoid a harsh penalty – or even any penalty at all. For instance, the SEC’s settlement order (Order) against an investment adviser alleged that the adviser failed to disclose its right to recapture certain fees that it waived or expenses that it reimbursed to four funds it advised and the fact that fee and expense recaptures caused those funds to exceed certain expense caps. Notably, the adviser escaped a penalty by self-reporting, taking remedial action and cooperating with the SEC. This article discusses the adviser’s alleged misconduct and the other relevant provisions of the Order. For more on the benefits and risks of self-reporting, see our two-part series “Why, When and How Fund Managers Should Self-Report Violations to the SEC”: Part One (Jan. 10, 2019); and Part Two (Jan. 17, 2019).