This is the second article in the Hedge Fund Law Report’s four-part series on information barriers in the hedge fund context. Generally, the series explores why hedge fund managers might wish to implement information barriers and identifies best practices for doing so. Specifically, this second article discusses the legal and regulatory basis for information barriers and describes the building blocks of effective information barriers (including the key players, physical components and technological processes). The first article provided an overview of various insider trading controls, including restricted lists, watch lists and information barriers, explaining how they can work together; described four principal benefits available from the use of robust information barriers; highlighted the types of firms that can benefit most from the implementation of information barriers; and described the types of firms that will find the implementation of robust information barriers most challenging. See “How Can Hedge Fund Managers Structure, Implement and Enforce Information Barriers to Mitigate Insider Trading Risk Without Impairing Securities Trading? (Part One of Four),” Hedge Fund Law Report, Vol. 7, No. 2 (Jan. 16, 2014). The third article will describe how a firm can limit access to material nonpublic information within the information barrier control environment and outline policies and procedures designed to bolster the effectiveness of information barriers. And the fourth article will discuss the benefits of training and compliance surveillance related to information barriers and describe the four most significant challenges faced by hedge fund managers in structuring, implementing and enforcing robust information barriers.