In addition to filing for bankruptcy, a hedge fund is suing its own investors to recover the profits that were paid out. Should investors who thought they were investing in a legitimate operation be forced to give back what those funds paid out if the payments were based on fraudulent numbers? Who is to blame?
If you are new to hedge hunds, here is an introduction I compiled last year.
Updated July 16, 2010 and originally published May 31, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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Luke Landes founded Consumerism Commentary in 2003 and has been building online communities since 1990. Luke, also known as Flexo, has contributed to PC World Magazine, US News, Forbes, and other publications. 
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Of course stolen money should be recovered from any investors who profitted from illgotten gains. Stolen property does not automatically go to whoever happens to be holding it after a heist.