On Wednesday, Galleon Group founder Raj Rajaratnam told employees via letter that the company is going to wind down all of its hedge funds. In a Wall Street Journal article (subscription required), a person familiar with Galleon said that one of the alternatives the company is exploring is selling out to another firm.

These alternatives were approached by Rajaratnam in his letter, as he told employees that it is "in the best interest of our investors and employees to conduct an orderly wind down of Galleon's funds while we explore various alternatives for our business."

Our continent is home to more family offices and foundations than any other part of the world. These institutions are companies (limited partnerships, usually) that exist primarily to benefit a particular family (as the name implies). So, if you have a boatload of family cash, you set up an LP rather than manage your holdings individually. There are advantages involving taxation and liability, among others.

Family offices are quite active in the hedge fund space, according to Preqin, with the average family office in North America allocating 14% of its assets to this class.

It's not exactly a shock, but tangible confirmation is always nice. Alternative investment research firm Preqin found in a recent survey that institutional investors are happier with their hedge fund returns now than they were a year ago. But, the gaps between happy and sad aren't as wide as you might expect.

A September 2009 survey of institutional investors revealed that 62% say "hedge fund returns have met expectations," compared to 53% in October 2008, when the market was consumed by all kinds of calamity. Only 11% responded this year that "hedge funds have exceeded expectations," which is up slightly from last year's 9%. Remember, though the market hit its worst late last year, the problem was building momentum for a while. Participants who do not feel that hedge funds have hit the mark shrank from 38% last year to 27% this year. And 66% are confident or very confident that their hedge fund investments will reach their objectives.

Out of every five hedge fund managers, one is prone to fibbing, according to research from NYU's Stern School of Business. This is likely to pour salt in the wound of an industry that's been in rough shape for the past year. And, it'll probably add a bit more pressure for transparency.

The NYU report uses data from 444 due diligence reports that investors commissioned from 2003 to 2008. The research team put the information against the test of reality to see where the differences are. The most common stretch of the truth was the amount of their own money the managers put into their hedge funds, fund performance and regulatory and legal histories. One fund inflated its assets under management by $300 million, while another wasn't up front about one of its partner's legal records (he had stolen a Chinese junk).

Every investor knows this bit of math: if you lose 50%, you need a gain of 100% to recover. It sounds odd, but the math is easy. You have a stock worth $100 and take a 50% loss. It's now worth $50. To get back up to $100, you need to double your money -- that's a 100% gain.

This simple rule is painfully apparent to hedge fund managers right now. While we're all celebrating the big gains they've made this year, the funds themselves understand that there's still a long way to go.

In the hedge fund business, there are many who can post a few years of strong gains. But how many can beat the averages for three decades?

Well, it's a rare feat. And, it means you'll be a billionaire.

This has been the case with James Simons, who is the leader of Renaissance Technologies. However, according to a recent letter to investors, he plans to retire by the end of the year. He is 71 years old.

Over the past couple years, Simons has been loosening the reins at the firm, so as to provide for a smooth transition. Actually, in his place will be co-CEOs: Bob Mercer and Peter Brown.

The Fairfield Greenwich Group has agreed to pay an $8 million settlement to a small group of investors in Massachusetts that lost money through the Madoff scam. This is expected to be a full repayment. Fairfield is also going to pay a $500,000 fine to the Commonwealth of Massachusetts. As part of the deal, the feeder fund does not have to admit any wrongdoing.

According to a report in USA Today, this is the first Madoff case in which a regulator secured some relief for investors. While this only addresses a relative handful of investors, the Massachusetts Secretary of State believes that it may become a precedent for other actions.

What began as a $6 million endeavor in 1996 is coming to a (partial) close. Atticus Capital is shuttering two of its three hedge funds and is returning $3 billion to shareholders. The move is strictly a personal one, according to CEO Timothy Barakett in a letter to investors. Atticus is slicing its flagship fund and a smaller one, but is keeping its European Fund, which has $1.2 billion under management.

Prevailing market conditions led Barakett to begin liquidating many of the Atticus Global portfolio's holdings, an effort he expects to be complete by the end of September. Investors can expect to receive around 95% of their money in early October, with the rest being disbursed after the fund's final audit later in the year.

If you think that the past 12 months have had any impact on the "2/20" hedge fund pricing model, please say hi to the Easter Bunny for me.

According to Bloomberg News, reductions from the 2% fee based on assets under management and 20% of investment gains aren't coming anytime soon. Further, the hedge fund community will only trade money for other advantages -- such as longer lockup periods and high minimum commitments (e.g., of at least $100 million).

And, it's worse if the fund is a top performer. After all, why change if you're making money? It seems that there's nothing quite like results for shutting up limited partners.

In a word: yes.

Despite all the talk about regulating these speculative investment vehicles, "Obama's financial overhaul plan included no big surprises or threats to the lucrative, secretive industry," writes The Wall Street Journal.

The name of the game is lobbying, which is easily funded by the $1.3 trillion dollar industry. Even after numerous Ponzi schemes and frauds have recently been exposed, the U.S. government has failed at regulating hedge funds, the most speculative area in finance, in part due to the industry's lobbying efforts.

Hedge fund manager Michael Regan has pleaded guilty to running a Ponzi scheme. Manager of the Massachusetts-based River Stream Fund, he admitted to defrauding around 70 investors. The fund held just shy of $20 million in assets ... despite the relatively meager $101,600 sitting in its accounts. The fund purported to return 20 percent a year since 2001, paying out $9 million in "profits" and returned capital.

Has your broker repeatedly sold you on the "safe" investment vehicle, the mutual fund? Investing in a wide variety of prominent companies, with solid, long-term track records, mutual funds have been an easy-to-understand and popular investment choice for decades.

Mutual funds are hugely diversified, holding large stakes in recognizable names such as Google (NASDAQ: GOOG), Citigroup (NYSE: C), Walmart (NYSE: WMT), Starbucks (NASDAQ: SBUX), General Electric (NYSE: GE), Bank of America (NYSE: BAC), and Fannie Mae (NYSE: FNM).

Since early 2007, it's been rough for the shareholders of Cowen Group Inc (NASDAQ: COWN), a mid-tier investment bank. The company's stock price has gone from $20 to low of $3.54.

But lately, Cowen's stock price has perked up, primarily because of takeover overtures. For example, there was an offer from Rodman & Renshaw at $7 per share.

However, this was rebuffed. Instead, yesterday Cowen agreed to a so-called "reverse merger" with hedge fund Ramius LLC, which will own 71% of the new entity. On the news, Cowen's shares increased 37%.

When we took a look at oil prices last Friday oil was hitting a new 6 month high, and we noted that we could be seeing $60 oil by the end of this week. We did indeed see oil hitting $60 this week, but today prices took a hit, dropping back down under $57 a barrel.

The main reason prices retreated today was in reaction to disappointing news on retail sales, unemployment, and more bad news from the housing market. Oil has dropped $2.10 a barrel today to $56.52, and some analysts think that it still has a way to go before stabilizing.

It certainly appears that way. WSJ picks up on dissent among investors in Renaissance Technologies, a massive quantitative hedge fund run by the highly secretive geek James Simons. Observers have been wondering how Renaissance's in-house Medallion Fund has managed to continue to outperform the stock market handily while funds open to outside investors have performed miserably. Simons' outside investors funds were apparently obliterated in the massive short squeeze also known as the most recent bear market bounce.