Japanese hedge funds are poised for better returns this year as small- and mid-cap stocks have recovered from worries over the Livedoor scandal, a media and Internet company, according to Dow Jones.

Livedoor’s founder was convicted of securities laws violations in falsifying earnings and sentenced to 2-1/2 years in prison this year. The scandal hurt hedge funds as it “made many investors nervous about smaller, new economy companies,” said Peter Douglas, a principal at GFIA, a Singapore-based hedge fund consultant.

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