A recent SEC Order making findings and imposing remedial sanctions against hedge fund manager Fontana Capital, LLC and its principal serves as a timely reminder that a hedge fund manager may be found to have violated Rule 105 of Regulation M when, on behalf of a fund, it engages in a short sale of securities of an issuer in the five business days prior to the pricing of a secondary offering by an issuer, then purchases shares of the issuer in the offering – even if the shares purchased in the offering are not used to cover the short sale.