ADI, one of France’s oldest and best known hedge fund managers, has been forced to close five of its funds after failed bets on Lehman Brothers, in what is expected to be the first of a series of casualties in the industry since the collapse of the US investment bank.

Although a large number of hedge funds that used Lehman as a prime broker have had their balances frozen at the bank's London-based broker-dealer, resulting in writedowns, few reports of losses on positions taken on the credit and equity of Lehman Brothers itself have yet emerged.