The SEC charged private equity fund manager, TZP Management Associates, LLC (TZP), for breaches of fiduciary duty related to management fee calculations and receipt of portfolio company fees. Fund LPAs authorized the adviser to receive “Transaction Fees” from portfolio companies but required the adviser to credit back a portion of such transaction fees to reduce or offset fund management fees. Transaction Fees included transaction fees, advisory fees, monitoring fees, or other similar fees received by TZP and its affiliates or any officer, director, employee, manager, member, partner, or shareholder of such entities. The SEC noted two problematic practices over a 5-year period related to such fees, resulting in more than $500,000 in inflated fees. First, management services agreements typically permitted TZP to defer certain Transaction Fees and charge interest during the deferral period at an annual rate of 8%. The SEC noted that on multiple occasions during the relevant period, to increase the cash flow at portfolio companies, payment of Transaction Fees was deferred. When, in certain cases, TZP later received the deferred Transaction Fees and interest payments, it included the Transaction Fees but not the interest payments in the relevant funds’ management fee offsets. TZP failed to disclose to LPs that it collected this interest and that it did not include this interest in the corresponding fee offsets. Second, for at least one portfolio company investment in which multiple funds invested, TZP improperly duplicated transaction fee reductions when calculating certain fee offsets. The case serves as a reminder to private fund managers to closely review their practices and documentation related to portfolio company fees and corresponding management fee offsets to ensure that calculations are consistent with fund governing documents and disclosures. Moreover, if there are deferred portfolio company fee arrangements that will impact such calculations or the amount or timing of management fee offsets, private fund managers should ensure that such practices and related conflicts of interest are fully and fairly disclosed to limited partners.