In many emerging and opening markets, the level of apparent regulation can sometimes provide a false patina of order.  In practice, local laws and regulations are often a byzantine maze of stamps, taxes, rules, forms and other bureaucratic processes that present enormous hurdles to investing and operating in such markets.  Investments in distressed assets present special risks because nearly every stage of the investment involves interactions with foreign government officials of one stripe or another, from members of the local judiciary, to financial and securities regulators, to central government banks.  In such an environment, it is understandable that hedge fund managers turn to a variety of advisors and agents for guidance and assistance in navigating the local landscape.  However, the use of third party agents and intermediaries in foreign investments presents distinct risks under the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits the payment of bribes to foreign government officials to obtain or retain business or a business advantage.  In particular, as U.S. hedge fund managers look to execute investment strategies in emerging markets, they must be aware of (and act in accordance with) the FCPA.  Not only does the law criminalize corrupt payments made directly to an official, it also prohibits the use of a third party agent or intermediary (regardless of the nationality or location of the agent or intermediary) to “knowingly” make such prohibited payments on behalf of a principal.  As a result, hedge funds that rely on third-party agents to assist and guide investments in foreign insolvency proceedings face a legal risk if such agents engage in corrupt activities in order to advance the business or investment interests of the fund.  In a guest article, Matthew T. Reinhard, a Member of Miller & Chevalier, Chartered, first provides a brief overview of the FCPA and how it relates to the use of third parties.  Next, Reinhard discusses practical steps hedge fund managers can take to vet their agents and protect themselves, their funds and their investors from engaging unscrupulous agents.  Finally, Reinhard discusses specific provisions hedge fund managers should include in their agreements with third parties and other steps that can be taken to guard against liability for corrupt acts by such agents.