In April 2009, Steven B. Cummings and a number of other investors sued hedge fund Paramount Partners, LP (Fund), its general partner Crossroad Capital Management, LLC (Crossroad), adviser/affiliate Capital Solutions Management, LP (CSM), sales agent Capital Solutions Distributors, LLC (CSD), and the respective principals of those four entities.  They alleged securities fraud, violations of various provisions of federal and Minnesota law and various common law claims arising out of the sale of limited partnership interests in the Fund.  See “Investors in Hedge Fund Paramount Partners Sue Fund, General Partner and Fund Advisers for Securities Fraud and Violation of Minnesota Law,” Hedge Fund Law Report, Vol. 2, No. 16 (Apr. 23, 2009).  A 2009 SEC investigation revealed that, of the $10.8 million invested in the Fund over its life, investors had withdrawn $1.2 million, the Fund’s general partner Crossroad had received $2.1 million, and the Fund’s principal, John W. Lawton, had withdrawn another $900,000 directly from the Fund.  The remaining $6.6 million was either lost in trading or otherwise unaccounted for.  Defendant CSM became a minority owner of the Fund’s general partner in 2006.  CSM’s subsidiary, CSD, became the Fund’s “exclusive distributor.”  They were compensated based on the amount of capital they raised for the Fund.  CSM and CSD and their principals moved to dismiss portions of the Plaintiffs’ complaint on the ground that certain claims were time-barred and that the remainder of the complaint failed to state a cause of action against them.  The Court agreed that certain federal securities fraud claims were time-barred and that the Plaintiffs had not stated a cause of action for consumer fraud under Minnesota law.  The Court permitted all other federal and state causes of action to proceed.  We outline the court’s reasoning, with emphasis on the portions of the decision most relevant to the hedge fund industry.