Hedge fund managers keen on protecting their funds and their investors from self-dealing or fraud engaged in by directors and officers of portfolio companies or underlying funds must sometimes resort to initiating derivative suits on behalf of such entities against such directors and officers.  For a discussion of derivative suits initiated by investors on behalf of hedge funds, see “In What Circumstances May Hedge Fund Investors Bring Proceedings in the Name of the Fund for a Wrong Committed Against the Fund, When Those in Control of It Refuse to Do So?,” Hedge Fund Law Report, Vol. 6, No. 3 (Jan. 17, 2013).  A recent example of such a derivative suit was initiated on June 18, 2013, when Omega Overseas Partners, Ltd. (Omega), a hedge fund and a shareholder in investment company Tetragon Financial Group, Ltd. (TFG or the Company), filed an action in the U.S. District Court for the Southern District of New York on behalf of TFG against its officers and directors; its investment manager, Tetragon Financial Management LP; and certain of their affiliates in connection with the board’s decision to approve TFG’s purchase of an investment firm owned and controlled by TFG’s principals and the subsequent share repurchase scheme.  These acts allegedly enriched the principals and TFG management unjustly.  An allegedly “deeply conflicted” TFG board committee approved this two-part scheme, benefitting themselves and TFG principals at the Company’s and its shareholders’ expense.  This article summarizes the primary allegations in Omega’s complaint.