By misrepresenting the value of bond funds, the hedge fund giant Clinton Group has alarmed the industry more than even the current mutual fund trading practices scandal.

Clinton, which handles $3.5 million in assets, is being investigated by regulators for misstating bond prices in a portfolio, according to The Wall Street Journal. This comes after the company reported a 6.4% loss in October from one of its flagship funds, the Clinton Trinity Fund, bringing that fund’s year-to-date losses to 15%. Clinton has made its reputation as a limited volatility shop.

People close to the investigation say that Clinton has seem its Trinity fund-assets sink to about $500 million from $800 million in just a few months as investors have pulled out of the fund, according to reports. A Clinton spokesman would not comment on the matter.

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