This is the third article in our series on co-investments in the hedge fund industry.  This article starts by citing evidence of interest among regulators in co-investments, then focuses on the challenging fiduciary duty concerns raised by co-investments, as well as conflicts and regulatory risks that typically arise when structuring or managing co-investments.  The first article in this series discussed the rationales for co-investments from the perspectives of hedge fund managers and investors; negotiating dynamics; and investment strategies in which co-investment are relevant.  The second article in this series described structuring of co-investments, fees, liquidity and relevant insider trading issues.