The inode_init_owner function in fs/inode.c in the Linux kernel through 3.16 allows local users to create files with an unintended group ownership, in a scenario where a directory is SGID to a certain group and is writable by a user who is not a member of that group. Here, the non-member can trigger creation of a plain file whose group ownership is that group. The intended behavior was that the non-member can trigger creation of a directory (but not a plain file) whose group ownership is that group. The non-member can escalate privileges by making the plain file executable and SGID.
The product does not properly assign, modify, track, or check privileges for an actor, creating an unintended sphere of control for that actor.