April 17, 2008 (LPAC)--The name John Meriwether may not mean much to you, but it is well known in the annals of financial catastrophe, for Mr. Meriwether was the founder of Long-Term Capital Management (LTCM), the hedge fund which collapsed in 1998 and spread panic across the financial world. Founded in 1994, the fund lasted only four years--only on Wall Street could that be considered "long-term"--and LTCM was not Meriwether's first brush with disaster. As vice-chairman of Salomon Brothers at the time it was caught manipulating the market for Treasury securities, Meriwether was fined $50,000 and left the company.

LTCM, whose partners included a couple of Nobel Prize-winning economists, Robert Merton and Myron Scholes, was the epitome of a quant shop, making huge bets according to arcane mathematical formulae which turned out to have no correlation to reality. LTCM crashed in Sept. 1998, when Russia postponed some of its debt and sent the derivatives world into a panic. The Fed orchestrated a bailout of LTCM to protect the derivatives market, and the firm was quietly put to sleep.

Now Mr. Meriwether is in trouble again, this time with his JWM Partners, whose main fund is down 28 percent for the year and facing a run by his "investors." At least this time, surrounded by much bigger and more bankrupt institutions, Meriwether doesn't have to worry about being accused of blowing up the financial markets. That job has already been done.