Can a hedge fund manager in the United States be sued for taking on too much risk? I am wondering if a hedge fund manager can take extremely bold risks with his fund as long as they state that such a thing can occur, or there's still a risk that you can be sued and lose the case in court. What does the law say on this?
The United States has two levels of security regulation, federal and state.
At the federal government level and in most states, the regulation is almost exclusively a matter of disclosure. The venture can be as risky as desired so long as the risks are fully and accurately disclosed.
A few states have (or did have until recently and could again have in the future) "substantive" regulation that outright prohibit certain kinds of high risk investments even if the risks are fully disclosed.
Hedge fund managers also have obligations arising from the organizational laws of state law entities. Many states have non-waiveable duties of entity managers, but some permit any obligations of an entity manager to be waived in an organization's governing documents.
Of course, there are some very high risk activities that are simply illegal no matter who conducts them, in matters of high non-investment risk to the general public.
For example, it is illegal to light cooking fires or do weed burning in drought stricken areas of the arid west during a fire ban, or to operate a nuclear power plant without a license.