HSBC could not immediately be reached for comment

Donald McKenzie in the LRB:

".... a hedge fund depends[on] a prime broker. These are usually big international banks, which typically hold funds’ money and act as custodians of their portfolios, transferring money or securities when trading demands. (... funds’ computer systems are directly linked to those of their prime brokers.) Prime brokers are a major source of leverage: they lend to funds, often using securities in the fund’s portfolio as collateral. A prime broker is also usually the first port of call when a fund is selling short and needs to borrow the securities in question. Indeed, a fund’s prime broker, or other investment banks, will often in effect do some of its trading for it, by means of what’s called a ‘total return swap’. "

Doh. Not so much prime brokers as prime morons:

"A report in the Financial Times said HSBC Holdings Plc had emerged as one of the largest victims, with potential exposure of about $1 billion. HSBC could not immediately be reached for comment."

Tom mentions that Superwoman has got something to say about it all though - it's all the government's fault apparently. Obviously.

It seems to me that the relationship of the hedge funds to the rest of the City is akin to that of the Elizabethan Court to the piratical activities of Drake, Hawkins and Raleigh. They're happy enough to take the ill gotten gains when conditions make it OK to do so but faint in mock shock and horror when it is revealed to them how such gains originate. Indeed, Good Queen Bess was probably regularly not 'immediately reachable for comment' by the Spanish Ambassador but, if she was, she'd no doubt have blamed the lax enforcement of international maritime law. ...