Due to the recent financial crisis, the hedge fund industry has experienced significant investor redemptions along with reduced availability of credit and leverage from prime brokers and other financial institutions.  As a result, certain shortcomings have been revealed in the way hedge funds have been managed, including liquidity mismatches identified between investment portfolio assets and liabilities and redemption restriction provisions contained in fund offering documents.  The liquidity mismatch dilemma was quite a shock for many hedge fund investors who were unable to withdraw capital according to required redemption terms upon the freezing of the credit markets.  Redemption restriction provisions such as lock-ups and gates have become commonplace as hedge funds have evolved from traditional strategies which primarily invested in liquid securities.  Hedge fund offering documents generally contain multiple liquidity provisions that enable fund managers to manage the liquidity needs of investors without selling assets at distressed prices or disposing of liquid assets while leaving the most illiquid investments to remaining investors.  Financial statements of hedge funds prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) usually contain disclosures of liquidity provisions specified in the fund offering documents.  In a guest article, Fredric S. Burak and Cindy Shen, both partners at EisnerAmper LLP, generally discuss the various liquidity provisions contained in hedge fund offering documents as well as the relevant accounting and financial statement reporting requirements and practices related to such provisions.  Specifically, Burak and Shen describe market practice regarding structuring of redemption provisions, including discussions of Accounting Standards Codification Topic 480 (formerly FAS 150), frequency of permitted redemptions, holdback provisions and in-kind distributions; lock-up periods, including discussions of “hard” and “soft” lock-ups and the use of sub-accounts within capital accounts; investor-level and fund-level gates and related disclosure considerations; suspensions of redemptions; side pockets and designated investments (i.e., investments placed in side pockets); the interplay between valuation of designated investments, US GAAP and the Custody Rule; calculation of management and performance fees with respect to designated investments; reporting performance of designated investments; structuring, fees and books and records considerations in connection with special purpose vehicles; and market color with respect to: typical length of lock-up periods, the relationship between strategy and length of lock-up; investor receptivity to various lock-up period lengths, percentage of assets typically subject to a gate on any redemption date, the “market” for the number of successive redemption dates to which excess redemptions may be carried over, opt-out rights with respect to side-pockets and renewed SEC attention on disclosure relating to side pockets.