According to a report in the Wall Street Journal official investigators believe that hundreds of millions of dollars may be missing from Con...

According to a report in the Wall Street Journal official investigators believe that hundreds of millions of dollars may be missing from Connecticut-based Bayou Securities. The hedge fund firm had unexpectedly told its investors it was closing last month after it had earlier in the year reported to investors that it had assets of $440 million. The WSJ’s source said that assets had "petered out" in the past 18 months, and that there had been far less trading during that time after years of high activity. The firm’s founder, Samuel Israel III, notified shocked investors that the funds were to close by letter in which he said that family troubles were prompting the decision. Mr Israel is the grandson of prominent New Orleans trader and philanthropist Sam Israel Jr, whose wealth was founded on a family importing business that merged with Donaldson, Lufkin & Jenrette in the early 1980s. "I am currently in the process of getting divorced. The opportunity to share in this miracle [of watching my children grow up] is not one that I plan to miss," he wrote. In another letter this month Mr Israel promised to return 90 per cent of investors’ money the following week and the rest by the end of the month. Investors have reported that they have received none of their money back and have not been able to contact the company. The matter is being investigated by the Connecticut Department of Banking and the US Attorney's office. A Bayou investor who called the banking commission said he was told that the investigation was just beginning and that any assets recovered are likely to be frozen.