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).

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.

Wednesday, Bernard Madoff requested leniency through his attorney Ira Sorkin, who suggested a sentence of 12 years would be a sufficient penalty for his client's crime of stealing billions of dollars in one of the greatest frauds in history.

Sentencing by U.S. District Judge Denny Chin is set for Monday June 29, and the eyes of the world will be upon him. So will the eyes of the yet-to-be discovered fraudsters everywhere.

My thoughts on the subject are relatively simple and have little to do with revenge or payback. In cases like this I often remember a very old quote from another time and place.

I've never met Goldman Sachs Group's (NYSE: GS) CEO, Lloyd Blankfein. But his rise within Goldman from being a lowly gold trader to bossing around investment bankers who shunned him has a satisfying story arc. And this year's bonus of about $70 million looks to be more than 30% higher than last year's lowly $54 million.

But -- like last year -- he'll probably continue to suffer by comparison with some of the hedge fund managers within Goldman who report to him. Not to mention the measly pay he received relative to his predecessor -- Hank Paulson.

But I don't really feel sorry for Blankfein. After all, Goldman seems to have emerged relatively unscathed by all the subprime gloom that has slowed things down on Wall Street this year compared to last. I think it has something to do with a decision to short mortgage backed securities this summer.

And it doesn't lower Blankfein in my eyes that he awarded my brother, William D. Cohan's book ,The Last Tycoons, the Financial Times & Goldman Sachs Business Book of the Year Award 2007.

Be sure to check out more Money Winners of 2007.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Goldman Sachs.

Ben Stein is generally seen as a fiscally conservative Republican (something about writing speeches for Richard Nixon ...), but even he thinks the insanely favorable tax treatment that hedge funds receive is outrageous. Referring to the extraordinary compensation many hedge fund managers receive:

Somehow, by some alchemy of brilliant tax lawyers, these people are paying long-term capital gains rates of 15 percent on their compensation (even though much of their pay is tied to trades with holding periods that last seconds). Doctors and lawyers and writers and actors pay about two times that amount.

That's it. End of discussion. Why should private equity and hedge fund managers receive such special treatment when they are making such an enormous amount of money. In the words of Johnnie Cochran, "It does not make sense!"

Stein then makes another brilliant proposal:

Why don't we just have a tax holiday for people who are fighting in Iraq and Afghanistan for five years after they get back? ...

Let's keep it real: Congress can take notice of a mammoth inequity in taxation during wartime and make the tax on private equity and hedge funds approximate the treatment of other highly paid people - or it can continue down the road to the Bastille.

Brilliant as usual, Mr. Stein. Why isn't this guy running for office? Oh wait, he actually makes sense.

More from Ben Stein:
Ben Stein blasts Supreme Court for failing to protect shareholders
Ben Stein outlines his perfect portfolio and gives more sage advice
Ben Stein: Sit back, relax, and enjoy the dips

A few months ago a doctor asked me why hedge fund managers make more money than he and his colleagues. After all, Doctor, when used before a name, is capitalized, while hedge fund manager isn't. While I'm joking about the capitalization -- it does reflect the much greater level of societal acclamation doctors receive from the moment they set their minds on an MD to their obituaries. So why doesn't societal acclamation translate into money?

Before trying to answer this question, it's worth noting that I just spent some time trying to find a list of the highest paid doctors -- but I failed. I found one list which said surgeons make an average of $247,536-- and a 1999 survey suggesting that neuro-surgeons make $500,000. But hedge fund managers do get ranked by income, as this New York Times article (registration required) points out.

My post on top-ranked James Simons (2006 income: $1.7 billion), suggested hedge fund managers out-earn doctors because top performing hedgies can leverage their time more efficiently. That is -- while a hedge fund manager can take on an additional $1 billion under management without adding a huge number of additional analysts, if a doctor takes on many more patients, he or she will need to hire a proportionately larger number of doctors to treat them. Most hedge fund managers let computers do much of the work -- something doctors can't do.