In the spring of 1996, Michael Berger formed an offshore investment company known as Manhattan Investment Fund Ltd. (“the Fund”). Berger employed a risky strategy of short-selling – an investment tactic that essentially bet on particular stocks dropping in value over a certain period of time. His strategy proved to be a disastrous miscalculation that eventually brought the Fund to financial ruin, leading to losses of nearly $300 million over the next four years and a chain of cover-ups and misdeeds that would leave Berger pleasing guilty to several criminal counts of securities fraud in the summer of 2000. Two of the chief questions left for courts in the wake of a collapse like Manhattan Investment Fund is how to equitably handle the rights of all the players involved, and perhaps more importantly, how to best divvy the remaining assets in according with those rights. As more and more hedge funds and other alternative investment companies are forced to declare insolvency, courts are increasingly being asked to answer this problematic question. The chief focus for the affected parties becomes not just how courts will interpret their rights but further, whether they can reliably depend on those rights to protect them during the bankruptcy process. This Note will focus on the rights and obligations of only one of the many parties implicated when a hedge fund dissolves – the prime broker. It explains the effects of safe harbors during the bankruptcy process for prime brokers and how these special protections operate ultimately to further Congress’s goals of providing stability, consistence, and clarity in the marketplace. Ultimately, this Note recommends two bright line rules courts should use when determining whether to grant parties a safe harbor under the stockbroker defense and the good faith defense, arguing that the application of these wills will provide courts with a pragmatic approach that will deliver consistent and reliable results.