The prospect of supervisory liability for legal and compliance personnel at hedge fund managers has occasioned concern among such employees, particularly since there has been a dearth of definitive guidance from the SEC as to when such liability attaches. On September 30, 2013, the SEC’s Division of Trading and Markets issued a set of frequently asked questions (FAQs) addressing the supervisory liability of compliance and legal personnel at broker-dealers pursuant to Sections 15(b)(4) and 15(b)(6) of the Securities Exchange Act of 1934. However, as the Investment Advisers Act of 1940 also contains a provision that imposes supervisory liability on compliance and legal personnel at investment advisers, legal experts have already begun to weigh in on the potential impact of the FAQs for investment advisers, including hedge fund managers. This article summarizes the SEC guidance contained in the FAQs and offers valuable insights from Russell Sacks and Charles Gittleman, partner and of counsel, respectively, at Shearman & Sterling LLP, and Jay Gould, partner at Pillsbury Winthrop Shaw Pittman LLP, on the implications of the FAQs for legal and compliance personnel at broker-dealers and investment advisers. For a discussion of a recent SEC settlement involving supervisory liability of a chief compliance officer at an investment advisory firm, see “Recent SEC Settlement Clarifies the Scope of Supervisory Liability for Chief Compliance Officers of Hedge Fund Managers,” Hedge Fund Law Report, Vol. 6, No. 33 (Aug. 22, 2013).