Recent criminal and civil enforcement actions allege that hedge fund manager personnel obtained material nonpublic information from employees and experts of at least one expert network firm. See “How Can Hedge Fund Managers Avoid Insider Trading Violations When Using Expert Networks? (Part One of Two),” Hedge Fund Law Report, Vol. 4, No. 5 (Feb. 10, 2011). While the merits of these actions remain to be determined, the impact of these actions on the hedge fund industry has already been considerable. At least one hedge fund management firm that was raided by the FBI has announced that it will wind down, and other firms that were raided by the FBI have sustained sizable redemptions. Even for managers that have not been directly involved, the renewed focus of the SEC, DOJ and FBI on insider trading has caused hedge fund managers to revisit their insider trading compliance policies and procedures. See “The SEC’s New Focus on Insider Trading by Hedge Funds,” Hedge Fund Law Report, Vol. 3, No. 22 (Jun. 3, 2010). While the legal principles and theories of insider trading have not changed, the application of those principles and theories to new methods of investment research has redefined the scope of permitted activity. To assist hedge fund managers in understanding what is permitted and what is prohibited in the current environment, how to conduct investment research without violating insider trading law and how to design compliance policies and procedures that reflect the new enforcement reality, the Regulatory Compliance Association’s 2011 Spring Asset Management Thought Leadership Symposium will feature a session entitled “Insider Trading – Analyzing and Addressing the Latest Enforcement Initiatives.” That RCA Symposium will take place on April 7, 2011 at the Marriott Marquis in Times Square in New York. The Hedge Fund Law Report recently conducted detailed interviews with three of the thought leaders scheduled to participate in the Insider Trading Enforcement session at the RCA’s April Symposium: Robert B. Van Grover, Partner at Seward & Kissel LLP; John Robbins, Managing Director and Global Head of Compliance at Babson Capital Management; and Adam J. Wasserman, Partner at Dechert LLP. The goal of these interviews is to enable hedge fund managers to continue performing rigorous and productive research while avoiding insider trading violations. We are publishing these interviews as a three-part series. The full text of our interview with Robert Van Grover is included in this issue of the Hedge Fund Law Report; our interview with John Robbins will be published in next week’s issue; and our interview with Adam Wasserman will be published in the following week’s issue. Our interview with Robert Van Grover, included in full below, covered a wide range of relevant topics, including but not limited to: steps that hedge fund analysts, traders or portfolio managers should take when talking to corporate insiders in order to avoid insider trading violations; whether hedge fund analysts, traders or portfolio managers may be charged with aiding and abetting a breach of Regulation FD by a corporate insider; the definition of “market color,” and how it differs from material nonpublic information; how to handle rumors; what a CCO should do upon discovery of insider trading by junior or senior personnel; what a hedge fund manager should do if the FBI comes knocking; what managers should do about the increasing use of wiretaps in insider trading investigations; trends with respect to banning the use of expert networks outright; terms that managers are negotiating in their engagement letters with expert networks; how to mitigate improper informal communications; best practices with respect to electronic communications; implications of increased flexibility in the SEC’s Enforcement Division with respect to issuing subpoenas; interaction between the SEC examination and enforcement processes; and considerations for hedge fund manager personnel considering entering into immunity agreements with the SEC under the new cooperation initiative. Notably, Van Grover recently sought and obtained no-action relief under the amended custody rule. See “SEC Temporarily Permits Hedge Fund Managers to Avoid Surprise Examination Requirement with Audits by Auditors That Are Registered with, but Not Subject to Inspection by, the PCAOB,” Hedge Fund Law Report, Vol. 3, No. 42 (Oct. 29, 2010).