Investor confidence and market behavior can be impacted greatly by events that do not necessarily correlate. In the case of the Bayou Hedge Funds fraud, these unique and non-recurring events fueled a fire in the hedge fund industry that has spread, but not necessarily due to the particulars of the Bayou Hedge Funds failure.
But, when dealing with significant investments made by pension funds, corporate entities, along with foundations and trusts, a healthy dose of skepticism is natural and appropriate.
