Most hedge fund managers implement personal trading policies and procedures, that is, rules governing trading by management company personnel for their own accounts rather than for funds or accounts managed by the management company.  Hedge fund managers implement such policies and procedures for either or both of two reasons: because they have to or because they should.  Some hedge fund managers have to implement such policies because they are registered (or required to be registered) with the SEC as investment advisers, and Rule 204A-1 under the Investment Advisers Act of 1940 (Advisers Act) requires registered investment advisers to establish, maintain and enforce codes of ethics that include personal trading policies designed to detect and prevent fraud in connection with personal trading.  Even managers that are not registered and are not required to register frequently implement personal trading policies and procedures as a matter of prudence.  This is because personal trading by management company personnel can violate laws and rules other than Rule 204A-1.  For example, personal trading can – and in the recent past, frequently has – resulted in insider trading violations.  The specific violator in such cases is typically the individual trader, but such violations adversely affect (often dramatically) the management company that employs the violator.  Also, personal trading can result in “front running,” in which an employee of the manager buys or sells a security before engaging in a similar transaction for a managed fund or account.  Similarly, personal trading can result in management company personnel usurping investment opportunities that legally belong to the manager’s funds or accounts.  On usurpation, see “SEC Enforcement Action Against a Private Equity Fund Manager Partner Calls into Question the Value of Self-Reporting in the Private Funds Context,” Hedge Fund Law Report, Vol. 4, No. 36 (Oct. 13, 2011).  Advisers Act Rule 204A-1 provides minimum standards for registered hedge fund managers in crafting personal trading policies.  But the rule is spare with respect to detail, leaving registered hedge fund managers relatively wide latitude in designing policies and procedures.  That latitude, of course, is constrained by other law and practice, the reality of SEC examinations and expectations on the part of increasingly sophisticated investors.  By the same token, even unregistered hedge fund managers typically look to practice under Rule 204A-1 as a guideline in crafting their own personal trading policies and procedures.  Moreover, once personal trading policies and procedures are in place, they must be, in the language of Rule 204A-1, “maintained” and “enforced” – yet the rule offers little in the way of guidance with respect to maintenance and enforcement.  Accordingly, market practice looms large in the design and implementation of personal trading policies and procedures.  Yet here, as in other areas of hedge fund operations, market practice is challenging to discern reliably.  With an increasing number of hedge fund managers facing an imminent registration deadline, and with substantially all managers facing heightened operating expectations from investors and regulators, the Hedge Fund Law Report is publishing a three-part series of articles that seeks to shed light on market practice with respect to personal trading policies and procedures of hedge fund managers.  This article is the first in the series and addresses: the overarching considerations in establishing a personal trading program; the scope of persons that can and should be covered by the personal trading program; and the reporting obligations that apply to covered persons, including a discussion of the securities covered by the reporting requirements and available exceptions from the reporting requirements.  The second article in this series will highlight various personal trading restrictions, including discussions of restrictions on the number of brokerage firms where covered persons can hold covered securities, the requirement to pre-clear certain transactions, holding periods for investments, blackout periods during which trades cannot be executed and other types of trading restrictions and prohibitions.  The third article in this series will survey recent technological developments designed to facilitate a hedge fund manager’s monitoring of compliance with its personal trading policies and procedures.