Hedge Fund Fraud: Hedge of darkness

Hedge funds - investors find themselves strangely attracted to them, and regulators just don't seem to understand them. But as incidences of hedge fund fraud increase, their bad boy appeal is waning, and hedge funds might have to come out of the shadows, says Nick Kochan

Hedge funds have taken the blame for much of today's market meltdown. Their power in the market makes them a systemic investing force, while the range of their investments makes them hard to understand and monitor. Instances of recently discovered fraud have been used to attack the whole sector, and prompt calls for tighter regulation.

The blacklist of hedge funds where fraud has been proven or alleged includes names such as Madoff, Weavering and Bayou. And this list is lengthening at the rate