Confidentiality or nondisclosure agreements (NDAs) can have powerful legal and practical consequences for hedge fund managers.  Drafting or monitoring missteps can, among other things, significantly constrain the ways in which information can be used, can put a manager at risk of insider trading violations and can limit investment exit opportunities.  This article – the second in a three-part series – discusses: the scope of permitted disclosure of information obtained pursuant to NDAs to six categories of common recipients in the hedge fund context; the terms of permitted disclosure to each of those six types of recipients; the scope and terms of required disclosure; and four important considerations with respect to the return and destruction of documents.  The first article in this series outlined the case for the importance of NDAs in the hedge fund industry and discussed: the “market” for duration provisions; events that trigger expiration of confidentiality obligations; four key elements of the definition of confidential information; and four typical carve-outs from the definition of confidential information.  See “Key Legal and Business Considerations for Hedge Fund Managers in Drafting and Negotiating Confidentiality Agreements (Part One of Three),” Hedge Fund Law Report, Vol. 5, No. 15 (Apr. 12, 2012).  The third article in this series will discuss remedies, damages and liability and non-confidentiality restrictions in NDAs.