Even as hedge funds face their worst yearly returns ever, they may take another collective $10 billion hit on money invested in Bernard Madoff’s namesake firm, which was revealed to be a giant Ponzi scheme yesterday, Bloomberg reports. Madoff was arrested and charged with fraud after admitting that his investment business was “one big lie” that lost up to $50 billion in clients' money.
Fairfield Sentry, a historically solid fund, may be the hardest hit, with $7.3 billion invested with Madoff. Bermuda-based Kingate Management had $2.8 billion invested, as did countless individual investors, who could face a complete loss. Meanwhile, James Cramer says the scam could have a dramatic impact on Wall Street, "bigger than Boesky."