Significant Hedge Fund Failures

Posted on March 1st, 2017 at 10:48 AM
Significant Hedge Fund Failures

From the Desk of Jim Eccleston at Eccleston Law LLC:

Investing in a hedge fund is risky and can be catastrophic. Here is a list of 4 significant hedge fund failures.

Bayou Group: Bayou Group in 2003 attracted a large amount of capital. However, in 2005 the SEC charged the hedge fund with conducting a Ponzi scheme. As a result, the company lost $500 million of investor money.

Peloton Capital:  Founded in 2005, this hedge fund was able to manage $3 billion in assets and reported spectacular returns 2006. However, in 2008 Peloton Capital was liquidated because of the subprime mortgage meltdown.

Satellite Capital: Founded in 1999, this hedge fund had a 25% return on investments in 2004 and it managed $7 billion by 2007. However, in 2008 the hedge fund was shut down because of the recession. In all, Satellite Capital lost 35% of its assets and only $3 billion in assets remained.

Long-term Capital Management:  This hedge fund posted annual returns of over 40% for several years straight and at one point held $120 billion in trading liabilities. Even though Long-term Capital Management grew rapidly from 1994-1999, the hedge fund took a government bailout payment in 1996 after losing $4.6 billion in AUM. Long-term Capital Management was forced to close down in 2000.

 The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of securities for financial investors including Securities FraudUnauthorized TradingBreach of Fiduciary DutyRetirement Planning Negligence, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today. 

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, James Eccleston, Eccleston Law LLC

Return to Archive



I am so blessed to have you and your dynamic team defending me. Your ethics, forward thinking and strategies are amazing.  You guys are the best group of attorneys in the country that I could hire to handle this complicated case.

Cindy C.


October 20, 2021
5 First-of-Their-Kind SEC Enforcement Actions Announced

Securities and Exchange Commission (SEC) Enforcement Director Gurbir Grewal recently discussed notable first-of-their-kind enforcement actions that his division has pursued.

October 19, 2021
FINRA Targets SPACs in Most Recent Exam Sweep

The Financial Industry Regulatory Authority (FINRA) has begun an examination sweep of advisors’ involvement with special purpose acquisition companies (SPACs).

October 18, 2021
SEC’s Statement on Complex Exchange-Traded Products

The Securities and Exchange Commission (SEC) recently voted to approve a pair of rule changes proposed by Cboe BZX Exchange, Inc. to list and trade shares of new exchange traded-products: the 2x Long VIX Futures ETC and the -1x Short VIX Futures ETF.