On November 14, 2013, the SEC commenced a civil enforcement action against Mark Megalli, a trader at now-defunct hedge fund manager Level Global Investors, L.P., in the U.S. District Court for the Northern District of Georgia.  This article summarizes the factual and legal allegations leveled by the SEC against Megalli and describes some key implications for hedge fund managers, including risks associated with gathering information from former employees of public companies and all third-party consultants (including but not limited to consultants retained via expert networks).  See “Former Rajaratnam Prosecutor Reed Brodsky Discusses the Application of Insider Trading Doctrine to Hedge Fund Research and Trading Practices,” Hedge Fund Law Report, Vol. 6, No. 13 (Mar. 28, 2013).  This article also provides several best practices for mitigating insider trading-related risks arising out of the retention and use of such research providers.  See “Best Practices for Due Diligence by Hedge Fund Managers on Research Providers,” Hedge Fund Law Report, Vol. 6, No. 11 (Mar. 14, 2013).  In many respects, the challenges associated with using these stand-alone third-party consultants are greater than those associated with the use of compliance-minded expert networks that have developed robust insider trading compliance infrastructures.