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To: Dennis who wrote (94224)	2/2/1999 8:27:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

<LTCM Pundits> Adios pundits. Good riddance I say. Pheeeeew what a relief,2 less pundits to screw up any more hedge funds (?). Nobel Laureate and Wall Street Veteran Retire From Hedge Fund 2.01 p.m. ET (1901 GMT) February 2, 1999 By Noelle Knox NEW YORK — Myron S. Scholes, one of the Nobel laureates who helped build Long-Term Capital Management LP, is leaving the hedge fund along with William Krasker, a veteran Wall Street risk-taker, marking the first well-known names to leave the firm since its near-collapse in August. Long-Term Capital Management lost more than $4 billion in a bizarre six-week financial panic after the Russian economic crisis flared last summer. The Federal Reserve Bank of New York had to orchestrate a private bailout for fear that a failure of the hedge fund would spread to other funds that had made similar investments and lead to a collapse of world financial markets. A group of investment banks pitched in $3.6 billion in exchange for 90 percent ownership. Since then, financial markets have rebounded sharply and the fund is on safer ground. But the scare has focused new attention on hedge funds — the largely unregulated investment funds that can make risky investments. Scholes, 57, will return to lecturing and writing at Stanford University's Graduate School of Business, where he is an emeritus professor of finance. He also will be a consultant to Long-Term Capital and keep his investment in the fund. Scholes, who married in October, said he had planned to spend more time in California, where he owns a home. "The crisis that LTCM faced in August and September initially delayed the implementation of that plan, but has ultimately allowed me to relocate to California on a permanent basis," Scholes said in a statement. "This move is possible now that LTCM's fund has stabilized." Scholes, and a fellow recipient of the Nobel Memorial Prize in Economic Sciences, Robert C. Merton, used financial models to help reduce the risk of these investments, but they couldn't predict the market's wild behavior when Russia defaulted on its international debt, and stock markets plunged around the globe. The rapid and unexpected losses at Long-Term Capital led many investors and onlookers to chastise those who put so much faith in the mathematical models of Scholes and Merton. Krasker, 46, joined Long-Term Capital from Salomon Brothers, where he was a managing director and a member of the research team in the firm's arbitrage group. Prior to his Wall Street career, he was a professor at the Harvard School of Business. Krasker also plans to do consulting work for Long-Term Capital.