5 Biggest Hedge Fund Failures

2. Long-Term Capital Management

Long-Term Capital Management was founded in 1994 by John Meriwether, a former head of fixed-income arbitrage at Salomon Brothers, and he even got two Nobel-prize laureates, Myron S. Scholes and Robert C. Merton for their work on value of derivatives. Nevertheless, Long-Term Capital Management suffered major crashes in Asia in 1997 and in Russia due to Russia’s default, causing losses of over $4.0 billion. The fund got bailout from the Federal Government  with the argument that its closure might negatively impact the solvency of its creditors, which included some major banks. Nevertheless, it closed its doors in 2000.