Amazingly, sources said some investors are still putting money into Millennium hedge funds, even after it warned existing investors about the legal reserve it established.

Millennium raised more than $1.5 billion between 2001 and last November; according to the industry newsletter MAR Hedge, much of it from large institutions.

Officials at the Duke Management Co. declined to comment on the university's investment with Millennium, but it is thought the school is among the many college endowments that put money into that and other hedge funds as they shifted away from equity markets after 2000.

The earliest investors are faring only somewhat better -- their agreements with Millennium allowed them to withdraw money once a year.

Demand for redemptions hasn't ebbed, said the investor, who called Millennium's recent hiring of Simon Lorne, a former Securities and Exchange Commission general counsel, "a desperate attempt to make them appear more kosher."

"People are pretty pissed off that they are activating this gate," the investor said. "People were hoping they wouldn't, and that they'd be let out. The harsh questions haven't been answered, like how it could happen on Englander's watch. I don't think one is coming."

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