While the interests of hedge fund seed investors and the managers in whom they invest frequently diverge, it is relatively rare for such a divergence of interests to wind up in court.  See “How to Structure Exit Provisions in Hedge Fund Seeding Arrangements,” Hedge Fund Law Report, Vol. 3, No. 40 (Oct. 15, 2010).  When it does, the results can be illuminating for the wide range of hedge fund industry participants that participate in the seeding process – whether as investors, recipients of investments or service providers to either.  See “Primary Legal and Business Considerations in Hedge Fund Seeding Arrangements,” Hedge Fund Law Report, Vol. 2, No. 38 (Sep. 24, 2009).  Accordingly, this article offers a detailed discussion of a recent decision by the Superior Court of Massachusetts involving two individual seed investors in a prominent hedge fund management business.  According to the plaintiffs’ allegations, the manager – i.e., the recipient of seed funding – engaged in a “shell game” of fund restructurings with the goal of stripping the seed investors of their right to a portion of net management fees.  The investors protected their rights via arbitration and this lawsuit, but with difficulty, acrimony, publicity and expense.  This article explains the factual background and legal claims in the dispute, and illustrates how seed investors may revise their form documents and approaches in light of the lessons of this dispute.  In particular, the arbitration award imposed provisions on the parties, mostly to the benefit of the seed investors, that effectively served as ex post amendments to the seed investment agreement.  Those provisions should have been included ex ante in this matter – and should be included, or at least considered, by seed investors in every seed investment deal.  We explain what those provisions are and why they matter to seed investors.  More generally, we derive practical lessons from the legal analysis and factual missteps in this matter that are relevant to anyone involved or contemplating involvement in a hedge fund seeding transaction.  See also “Massachusetts Courts Approve of Accounting Firm Rothstein Kass’ Role as Award Arbiter in Hedge Fund Management Fee Dispute,” Hedge Fund Law Report, Vol. 3, No. 18 (May 7, 2010).