On August 10, 2011, the SEC filed a complaint (Complaint) against a hedge fund management company and its principal, generally alleging that the defendants solicited a $1 million investment based on five categories of misrepresentations.  The management company purported to manage a hedge fund with a quantitative investment strategy, and the investment came from an individual bond fund portfolio manager at a prominent New York hedge fund management company.  The misrepresentations in this matter highlight a number of pitfalls that hedge fund investors should avoid.  More generally, the matter highlights a number of due diligence points for investors to add to their DDQs – if the points are not there already.  This article describes the factual and legal allegations in the Complaint, then discusses the nine key lessons from the Complaint.