A recent US Securities and Exchange Commission (SEC) settled enforcement action that found that a hedge fund acted as an unregistered “dealer” has blurred the traditional line between dealers and traders. On August 17, 2021, the SEC announced the settled enforcement action against an investment adviser and associated individuals (the Respondents) alleging that these persons caused executing brokers of a hedge fund to violate the order-marking and locate requirements of Regulation SHO. Notably, the SEC also found that the Respondents caused the hedge fund to act as an unregistered “dealer” in violation of Section 15(a)(1) of the Securities Exchange Act of 1934 in connection with transactions related to certain securities purchase agreements and equity line agreements. This latter finding seems like a significant departure from statements of SEC officials and the existing SEC staff guidance that, since at least 1994, has consistently distinguished between dealer and trader activities when expressing the view that hedge funds do not act as dealers. In this White Paper, we examine the SEC’s historical positions regarding what constitutes a “dealer,” SEC staff guidance that would appear specifically applicable to the alleged “dealer” conduct, and questions that hedge funds and other market participants should consider in evaluating the scope of the SEC’s action to their operations.