This is the second article in our three-part series guiding hedge fund managers through the motley patchwork of authority governing employee privacy rights and employer privacy obligations.  The crux of the challenge is as follows: securities regulation and best practices require hedge fund managers to exercise considerable vigilance over employee communications.  To cite one headline example, a hedge fund management company can be held criminally liable for failing to adequately supervise employees that engaged in insider trading, and the DOJ and SEC understand adequate supervision to include continuous and vigorous monitoring of e-mails, chats and other electronic communications.  On the other hand, non-securities regulation and other authority grant employees certain privacy rights in their electronic and other communications.  How can hedge fund managers comply with applicable securities regulation while also complying with applicable privacy regulation – especially where the two regimes conflict?  Outlining an answer to that question is the goal of this series.  This article discusses the five primary sources of employee privacy rights, then offers three best practices for reconciling these often conflicting sources.  The first article in this series detailed six reasons why hedge fund managers need to monitor electronic communications of employees and highlighted two settings in which procedures other than electronic communication monitoring are most effective.  See “How Can Hedge Fund Managers Reconcile Effective Monitoring of Electronic Communications with Employees’ Privacy Rights? (Part One of Three),” Hedge Fund Law Report, Vol. 7, No. 13 (Apr. 4, 2014).  The third article will describe factors bearing on the reasonableness of an employee’s expectation of privacy, the benefits and limits of specific policies regarding electronic communication monitoring and best practices in this area.