People's eyebrows perked up when D.E. Shaw revealed it would lay off a tenth of its staff, about 150 jobs. Many see it as a harbinger of things to come, unfortunately.

The industry in many ways is hurting, as assets continue to decline. The conventional wisdom has been that bigger companies are faring better, as investors show a preference for established companies with enough resources to install solid compliance and administrative programs. But as the D.E. Shaw layoffs show, big fund companies are not immune to industry trends.

D.E. Shaw is the second largest hedge fund company, Breakingviews notes. It managed nearly $40 billion in 2008, but that has dwindled to just $21 billion. The firm was just bumped off of AR's list of biggest fund companies. D.E. Shaw has certainly had some PR lumps since the crisis began.

The firm was held up by many as an active "gater." Those gates will soon expire, but perhaps the damage has been done. Fairly or not, one investor labeled the firm "a poster child for treating investors poorly in 2008," notes Financial News.

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