According to Business Week,
“Investors in a 10-month-old Bear Stearns (BSC) hedge fund are learning the hard way the danger of investing in risky bonds with borrowed money. The investment firm’s High-Grade Structured Credit Strategies Enhanced Leverage Fund, as of Apr. 30, was down a whopping 23% for the year.”
“The situation is so bleak that Bear Stearns’ asset management group is suspending redemptions at the onetime $642 million fund—meaning investors have no choice but to sit on their losses. And that’s got some hopping mad.”
“‘At the end of the day, I’d like someone to be honest with me about what’s going on,’ says one investor in the hedge fund, which bet heavily on bonds backed by subprime mortgages.”
“An investor in Europe, who didn’t want to be identified, says he’s been trying to get his money out of the hedge fund since February.”
“In a June 7 letter to investors, Bear Stearns says it’s suspending redemptions because the ‘investment manager believes the company will not have sufficient liquid assets to pay investors.’”
Hey, that's what happens sometimes to risky investments...