Ethical Considerations in Private Equity Fund Analysis

As an investment analyst at a mid-sized asset management firm, you are responsible for conducting due diligence on a private equity fund that your firm is considering investing in. During your analysis, you come across a fund manager who has been previously sanctioned for unethical behavior related to misrepresentation of fund performance data. However, over the past two years, there have been reports indicating that the fund manager has made significant strides in improving compliance and ethical standards. You also notice that the fund has provided impressive returns, significantly outperforming its peers in the same asset class.

Given this context, evaluate the ethical considerations you must weigh before making a recommendation on investing in this private equity fund. In your response, discuss the importance of due diligence, conflicts of interest, and the implications of the manager's past sanctions on the decision-making process.