Upset about paying $3.80 a gallon for gasoline? Hank Paulson, former Goldman Sachs Group (NYSE: GS) CEO, argued that it was all supply and demand so quit your bellyaching. I thought speculation was playing a big part -- traders who bought oil and sold the dollar to drive up the price. Indeed, a few months agao I found a source who thinks 60% of the volume was from speculators.

Seems even that was too low an estimate. The Washington Post reported Wednesday that the Commodities Futures Trading Commission (CFTC) has analyzed the books of oil traders and calculated that 81% of oil trading volume was conducted by speculators.

Guess who broke open the opportunity for oil speculators to trade oil in a loosely regulated fashion? Goldman. The Post reports that In 1991, its J. Aron unit argued that "it should be granted the same exemption given to commercial traders because its business of buying commodities on behalf of investors was similar to the middlemen who broker commodity transactions for commercial firms."

There are roughly 10,000 hedge funds managing $2.7 trillion. And not one of them is required to disclose its holdings to regulators. That's why we can expect the unexpected every day for the foreseeable future until every single hedge fund that's lost money for investors dribbles out its bad news -- in the form of a leaked letter to clients.

This comes to mind for those seeking an explanation for today's nasty market action. According to this letter to clients from Sentinel Management Group, a $1.5 billion hedge fund that appears to provide a short-term parking place for the cash of commodities traders, there's a run on the bank going on at Sentinel. That's because for some reason, its clients want to get all their money out RIGHT NOW!

And Sentinel has asked the Commodities Futures Trading Commission (CFTC) to keep its cash hungry investors at bay. But the CFTC has declined. This situation raises so many questions: Why would Sentinel's investors lack confidence in what is supposed to be a money market fund? If Sentinel invested in assets other than money market funds, is that consistent with its charter? What kinds of risks was Sentinel taking? Why are its investors clamoring for the exits?

And most importantly to the market, does anyone know how many more such hedge fund implosions we can expect before we get to the bottom of this mess?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.