Reuters reports that fund manager James O'Shaughnessy warned bosses at Bear Stearns in 2007 that the firm's investment funds were taking on unnecessary risks, but he was 'politely told to mind my own business'.
O'Shaughnessy, who left the firm in early 2007, expressed concern about the use of leverage and trading illiquid instruments like CDOs and subprime-backed mortgage bonds. The former Bear manager doesn't, however, just lay the blame for the financial crisis at Bear Stearns' door. He said 'It's easy to say with hindsight. Yet this was an epidemic. You can't really just say 'J'Accuse Bear'!'. You have to go around to everyone at the table...(where) all the other investment banks and a hoist of hedge funds were doing exactly the same thing'.
In the meantime, Financial News reports that Barclays Capital has come out and said that up to 80% of hedge funds could disappear in the next year, as no leverage is likely to result in no business. And Bloomberg reports that, according to Eurekahedge, the global hedge-fund industry lost some $64bn in assets in November due to market declines and redemptions. The news agency also says that the Oppenheimer Champion Income Fund fell 55% last month, after the US government changed the terms of TARP funding.
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