I believe that's about "who may or may not have been on the diligence team". It's not inherently unethical, because the investment firm employee starting the he

I believe that's about "who may or may not have been on the diligence team". It's not inherently unethical, because the investment firm employee starting the hedge fund may not actually have any secret knowledge. But it's deeply alarming, because it's very possible (and hard to confirm) that they do have secret knowledge, so that practice is generally illegal even when it's not unethical.