In the public company context, internal investigations have become an accepted and expected adjunct of good corporate governance. In response to even the remotest whiff of a violation of law, regulation or internal policy, prudent public company managers generally initiate a thorough investigation with the twin goals of fact-finding and precluding or mitigating civil or criminal charges. As responses by some notable hedge fund managers to the Galleon allegations have demonstrated, the purposes, goals and many of the techniques of internal investigations developed in the public company context apply, albeit with some variation, in the hedge fund world. That is, for hedge fund managers whose current or former principals or employees have been or may be charged with civil or criminal violations, or may simply be in the zone of suspicion, an internal investigation can uncover relevant evidence, identify the absence of evidence and can credibly demonstrate to regulators and prosecutors that the hedge fund manager has an independent commitment to compliance and thus does not require any external prodding in that regard. In light of the explicitly stated plan on the part of the SEC’s Enforcement Division to step up enforcement of insider trading laws and regulations applicable to hedge fund managers, internal investigations are expected to become a more standard aspect of hedge fund legal and operational practice. However, hedge fund managers as a group have a relatively short track record with internal investigations, at least compared to public company managers, and internal investigations in the hedge fund context raise specific concerns. Accordingly, this article seeks to acquaint hedge fund industry participants with the primary issues to be considered when initiating and conducting an internal investigation, and in doing so discusses: recent examples of internal investigations initiated by operating companies and hedge fund managers in response to the Galleon allegations; the eight most common contexts in which a hedge fund manager may consider initiating an internal investigation; the purpose of an internal investigation; when and how to define the scope of an internal investigation; whether the fact and any findings of an investigation must be disclosed; retention of documents and records; whether an investigation should be conducted by internal personnel or outside law and accounting firms; who outside counsel represents; whether or not an investigation report should be written; and what to do if the investigation uncovers a violation.