The SEC brought an enforcement action against Diastole Wealth Management, Inc. (Diastole) and Elizabeth Eden, its principal, for failing to adequately disclose conflicts of interest related to investments they managed for a private fund client. The SEC stated that Diastole and Eden invested certain of the private fund’s assets in a company that Eden’s son principally owned and operated. The fund’s limited partners were all also individual advisory clients, such that Diastole and Eden owed a fiduciary duty both to the fund and directly to the fund’s limited partners. However, the SEC stated that Diastole and Eden initially did not disclose that the fund had invested in Eden’s son’s company. Diastole and Eden also did not make adequate disclosures of material financial conflicts relating to the fund’s investments in Eden’s son’s company. For example, the SEC stated that Diastole and Eden did not disclose that fund investment amounts could and would be used to pay off loans Diastole had made to the son’s company. Diastole and Eden breached their fiduciary duties as investment advisers by making conflicted investments without disclosing material facts, and they also made certain misleading statements to investors in a pooled investment vehicle, all in violation of various provisions of the Advisers Act.