Wall StreetSpeak

Again, a letter that no investor wants to receive:

October 19th 2009

Dear XYZ Employees, Clients and Friends:

During this challenging time, I wanted to take a moment to address you directly. As I am sure you understand, I am not able to respond in detail to the charges recently brought against me. But let me be clear: they are, without exception, entirely baseless. I am innocent and will vigorously defend myself and our firm.

As I move forward on my defense, I want to assure you that our commitment to our investors and employees will remain unwavering. I will continue to be here working for XYZ, and the firm will continue to serve its clients with effectiveness and integrity. Thank you for your ongoing support.

This letter is of course sent out after wide press coverage in the WSJ. Most likely, it has been reviewed by attorneys and PR firms. The question that most investors are now asking is who is next? Who in their portfolio may also be under investigation? The institutional allocators need to revise their investment processes to screen out the potential reputational risk associated with an investment with an alleged "cheater."

On the other side, how many hedge fund firms called a Monday morning meeting to discuss potential impact and isolate any potential issues in their own firms. Lastly, how many shorted names in the portfolio of the alleged "crooked manager" who will be hit by redemption's.

For $1,000: What is suspend redemption's?