Hedge funds found themselves under an uncomfortable spotlight last week. Embroiled in the US Securities and Exchange Commission’s action against Goldman Sachs, US hedge fund Paulson & Co reassured investors that it had done nothing improper.

Similarly, Magnetar Capital, another US hedge fund which profited from shorting the US housing market, faced criticism over the construction of its portfolio. It told investors the strategy was based on a mathematical statistical model and the firm did not control the asset selection of the portfolio.