Seeing in the Dark

Funny thing about hedge funds. Sometimes the more forthcoming a manager is, the less you want to trust him.

Connecticut's embattled Bayou Fund doesn't currently rank as a bastion of transparency, but it did once. Bayou manager Samuel Israel was famously gregarious, showering investors with information, emailing weekly performance reports and telling anyone who would listen how great he was doing. Israel trumpeted annual returns that supposedly blew away most of his peers.

Now, the shades are pulled, and Israel has shut his mouth. State and federal prosecutors are investigating what happened to up to more than $400 million of client assets that some investors worry went up in smoke. ...