We've noted how hard it is to stay on top once you've made it to the pinnacle of the hedge fund industry. Stupendous returns year after year are hard to generate; the credit crunch marked a stumbling block for many. This brings us to the case of Vision Capital, founded by two visually impaired men.

"The managers burst on the scene in 2005, when Vision posted a 105 percent gain. They followed that up with an even better 188 percent return in 2006," notes Reuters. "But returns fell sharply in more recent years. And since last year, investors have been unable to pull money out of most Vision funds."

ANd now regulators are involved; the SEC has opened an investigation.

The company mainly invested in PIPEs, a field that has generated a lot of controversy. The issue in some cases seems to be how funds value the hard-to-price warrants they receive. The valuation method is not uniform across funds, and there is always a temptation to jack up valuations to keep returns high.

PIPE deals have long been dogged by iffy practices. A judge recently ruled a hedge fund manager committed fraud by trading stocks of companies with which he was pursuing PIPE deals.

For more:
- here's the Reuters scoop

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