With the Madoff scandal came the realization that even funds that did consistently generate steady returns were not immune to trouble. There is even an aptly named "Hedge Fund Implode-o-Meter" website tracking the number of major funds which have "imploded" since late 2006.

Investors have demanded more. In 2008 they 'spoke with their feet' and the hedge fund industry suffered $782bn of redemptions. The Hedge Funds had to listen. What was requested, according to a report by Scorpio Partnership, was "transparency, simplicity and liquidity". Likewise, the Hedge Fund Scandals were a wake up call to investors and much more focus is being placed on operational due diligence, to avoid investing in any future hedge fund failures.

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