Will brokers be forced to monitor funds better?

The prime brokerage business has been on fire the last few years, Bear Stearns has been one of the big winners. So people are wondering what the $160 million judgment involving an imploded hedge fund means. A bankruptcy judge has ordered Bear Stearns to pay off investors in the Manhattan Investment Fund, led by Michael Berger, which racked up huge losses in the 1990s. The judge ruled that Bears Stearns is responsible in large part because it failed to act in a timely manner to end some very dubious practices. The manager issued false statements and transferred $141.4 million to its Bear Stearns account to meet increased margin requirements. Much of that amount will be returned to investors if the judge has his way. Prime brokers may want to review their oversight as more hedge fund turmoil is on the way.

For more:
- here's the New York Times article