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).

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.

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.

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.

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%.

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.

Early this morning, the Associated Press reported that talks between Chrysler's lenders and the Treasury Department had "disintegrated." The parties were trying to lower Chrysler's $6.9 billion in secured debt, a move that many hoped would stave off bankruptcy.

It appears that the hedge funds (roughly 40 of them) that hold roughly 30% of Chrysler's debt are looking for a deal better than the one struck between the banks and the government. The four banks that hold 70% of the automaker's debt agreed to erase that debt for $2 billion -- the hedge funds want more.

Family Dollar (NYSE: FDO) has had quite a run. Over the year shares in the super discount store chain have risen by roughly 65%, rising from just under $20 on April 7, 2008 to a closing price of just over $33 on April 6, 2008. The obvious reason is the awful economy.

Earnings later this morning are hotly anticipated. Our Piqqem Sentiment for Family Dollar is positive but beginning to trend down. Will cheap keep beating the Street?

On Monday, the stock market rose 498 points -- a move that many attributed to the announcement over the weekend of a plan to buy $1 trillion in toxic waste that uses government loans to lure investors -- such as hedge funds -- into buying extremely risky securities.

That sounds like the same thing that got us into the financial crisis in the first place. It also sounds like the sort of thing that hedge funds do for a living -- and those hedge funds are making a handful of skilled people into billionaires.

When looking at hedge funds, an investor will check out a variety of risk measures. But over the years, there was something that was often overlooked: fraud.

However, as the credit markets seized up, we discovered that there were some shady hedge fund operators. Of course, the biggest example was Bernard Madoff, whose Ponzi scheme may have reached as high as $65 billion.

As should be no surprise, investors are now conducting investigations and background searches on hedge funds. Good idea, huh? Unfortunately, it's too late for many investors.

It's Friday, and a big storm is approaching the West Coast, a fitting end to a wild week. The SEC is investigating whether certain hedge funds allowed employees and favored clients to redeem their money before less favored clients. If allegations are true, then this gives new meaning to the term "front running", and should prove a great way to rebuild the reputation of an industry already viewed as having questionable ethics.

Sorry, hedgies. Headhunters think you have another 20,000 job losses ahead in 2009, representing a 10% industry contraction. As if it wasn't bad enough that your base salaries were getting hammered.

Yet Vikram Pandit shocked with news that Citigroup, Inc. (NYS: C) may run a profit. The question -- for how long? Credit cards, commercial real estate, and many other shoes still dropping. Our Piqqem Sentiment on TARP recipients shows neutral across the board, so could Vik be right, and could it be that the gloom is lifting? Has TARP really been great coverage?

Apple, Inc. (NASDAQ: AAPL) is a company with $31 per share in cash on hand that just can't get a break. Analysts have begun downgrading the stock on fears that sales of Macs and iPhones will slow. As Apple hadn't been beaten down enough, shares dove today. Sentiment on Apple is rapidly deteriorating.

Meanwhile, Hedge Fund Research, a company that tracks hedge fund returns, released its February stats for how the hedgies performed. According to HFR, the hedgies beat the market soundly, losing only 0.5% in the month.

Here's the latest PM dose of happy doom. Tyler over at ZeroHedge points out that CDS (credit default spreads) on Berkshire Hathaway are hitting all time highs, implying that the risks Berkshire's (NYS: BRK.B) robust cash machine could break down (and even default at some point) are rising fast. Piqqem Sentiment on Berkshire B-class shares is negative, natch, after Buffett's recent mea culpa for losing money last year. If Buffett has lost his mojo, then does anyone have any magic left?

"Did you go to Sally's yesterday (Salvation Army)? "Why yes, I bought a nice skirt and a matching blouse."

How about a second-hand hedge fund? A wild idea has been born by Second Market, which describes itself as the world's largest market place of illiquid assets.