Hedge Funds Performance

Lehman bankruptcy leads to market tizzy, while Pickens sues and firm sells R3 stake

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Banks, hedge funds and others foolish enough to have insured the debt of now-bankrupt Lehman Brothers by selling credit default swaps must now pay the piper. Today is the deadline for these insurers to make whole the counterparties to those transactions, and early results from an auction of the swaps indicates the cost will be at least 90.25 cents on the dollar for each bond insured.

The auction is expected to be one of the largest settlements of such swap contracts, reaching $400 billion in volume. The market for credit default swaps is estimated at $55 trillion. Part of