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Well...they lost the least.

Securities firms are poised to earn about $8 billion on prime brokerage to the $1.2 trillion of mostly unregistered pools of capital that let managers participate substantially in the gain or loss of the money invested. Goldman and Morgan Stanley will collect the most fees, as well as market insights, for providing services to hedge funds, according to Celent LLC, the Boston-based firm founded in 1999 to provide research and consulting advice to financial-services companies.

"It looks like there has been no fallout for the prime brokers," said Michael Holland, who manages $4 billion at New York-based Holland & Co. Amaranth "makes those businesses look much more attractive rather than less attractive."

That wasn't so apparent eight years ago, when Long-Term Capital Management LP collapsed on inauspicious trades after banks allowed the hedge fund to leverage its $2.3 billion of capital into a portfolio of about $125 billion of securities. The New York Federal Reserve organized a $4 billion bailout and regulators urged Wall Street to limit lending and monitor the risks that its clients are taking.

Posted by edelfenbein at September 25, 2006 11:20 AM