Concerns about fiduciary obligations and regulatory scrutiny are prompting some hedge fund advisers to reduce their use of side letter arrangements or at least to become more cautious about their use, lawyers said. Side letters are tailored to certain investors in hedge funds. They give investors different beneficial terms in relation to fees, redemption rights and transparency.Jedd Wider, partner at Morgan Lewis & Bockius in New York, said he has seen clients do away with side letter arrangements altogether. Wider said his clients are instead including language in their documents granting the same benefits to all investors in a particular share class. The Securities and Exchange Commission has focused on hedge fund advisers' use of side letters in recent examinations (CR, 4/10). Initially, hedge fund advisers seemed unlikely to significantly change their practices (CR, 7/3). Barry Barbash, partner at Willkie Farr & Gallagher in Washington, D.C., said the elimination of side letters could be used as a marketing technique by the adviser to show it is treating all investors the same. He said he has noticed a trend of hedge fund advisers looking at side letters more carefully. Disclosure language should be designed to convey that certain investors may receive terms that others will not, Barbash said. Another lawyer said he has noticed that clients are more frequently consulting him about side letter arrangements.