Excerpt from Alternatives to Traditional Securities Offerings (March 2013):

Certain investors in PIPE transactions, such as hedge funds, may seek to hedge their investment—e.g., by short selling the shares to be acquired in the PIPE (or the shares underlying a convertible instrument to be acquired in the PIPE).
The SEC has brought several enforcement actions against investors for short sales of common stock when the sales occurred prior to the time that the resale registration statement became effective, and were then covered with securities purchased in the PIPE once the registration statement became effective. The premise of these actions is that section 5 of the Securities Act—which generally requires every offer and sale of securities to be registered with the SEC or exempt from registration—is violated by the short sale because it is an offer and sale of securities that have not yet been registered. Although the SEC’s view did not prevail in these cases, it continues to adhere to it.
Accordingly, market participants have continued to structure their hedging activity in a manner consistent with the SEC’s position by (i) generally waiting some period of time before hedging to avoid statutory underwriter concerns and (ii) engaging in “double print” transactions. Double printing refers to purchasing shares in the market to close out a short position (i.e., delivering those shares to the purchaser in the short sale or the stock lender that provided shares initially used to settle the short sale). The restricted securities acquired in the PIPE are sold in the market roughly contemporaneously, but with sufficient time between the trades so that they are separate and the investor is subject to some market risk.