The Wall Street Journal is reporting [subscription required] that poorly-performing 'quant fund' managers will be forced to explain their recent poor performance to investors in their funds beginning this week. Despite normally remaining quite secretive and under-the-radar, many of these fund managers are being forced to hold conference calls in order to save the reputation of the firms they work for.

All of the negative news from investment bank-owned hedge funds such as that from Bear Stearns (NYSE: BSC), Barclays (NYSE: BCS) , and Goldman Sachs (NYSE: GS) points to significant risks in the asset management business. When times are good, profits and positive news from the hedge fund businesses inside these investment banks is plentiful. But when times begin turning bad, as they seem to be now, the risk of destroying a firm's reputation is quietly intertwined with any signs of poor performance.

Investors need to now be extra careful before investing in the financials. Derivatives exposure, topping private equity activity, hedge fund risks, and subprime vulnerability are all uncertainties and potential sources of destruction that need to be remembered before purchasing these stocks.