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Update: Bear Steans Verdict Is In! Hand-Holding And Belly-Rubbing Now Mandatory, Says Judge, Jury Still Out On OJ's Culpability

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Only hours ago we were complimenting a commenter for bringing to our attention one reason investment banks were pushing for hedge fund regulation: the fear that the prime brokerages will be the fall guys for hedge fund failure. Because hedge funds are not as regulated as broker/dealers, the argument goes, regulators will be tempted to go after the brokerages for failing to police the activities of hedge funds.
And, as if to prove the point, a federal bankruptcy judge just ordered Bear Stearns Cos. to return at least $125.1 million to a failed hedge fund now in bankruptcy.

"This is going to send shock waves through many prime brokers, because they've been very careful to limit their responsibility for their customers' actions,'' Michael Missal, a former SEC lawyer and head of the regulatory practice at Kirkpatrick & Lockhart Preston Gates Ellis LLP in Washington, said before today's hearing.''

Earlier: I can think of nothing more fitting than for the four of you to spend a year removed from society so that you can contemplate the manner in which you have conducted yourselves. I know I will.
Bear Stearns Told to Repay Hedge Fund $125.1 Million [Bloomberg]