There has been no shortage of calls from continental European leaders such as Angela Merkel and Nicolas Sarkozy for regulation of the hedge fund industry to limit potential systemic risks to the global financial system.

But it's little surprise that some executives in London, where the vast majority of European hedge funds are actually based, have privately suggested the calls stem from motives rather more mixed than simply wanting better regulation.

These, they say, can be anything from these leaders wanting to hide their own political problems, to them feeling some ownership because many hedge fund investors are based in continental Europe, to a simple feeling jealousy of an industry that in Europe at least is mostly British.

Whatever the motives, the hedge fund industry has chosen to focus on the many benefits it believes it brings -- to Britain.

In a pamphlet entitled "A British success story", which has been sent to all members of parliament and leading civil servants, the Alternative Investment Management Association talks about how much UK hedge fund firms run, how many people in Britain it employs, and its benefits to the British pensions and savings industries.

As industry bodies such as AIMA strive to head off stringent regulation for the industry, UK managers will be watching and waiting -- and wishing them 'best of British'.

The sunny, secretive Cayman Islands have an image to protect. Bracing for a crush of reporters looking for comments a few weeks before a G20 meeting that may target tax havens like the Caymans, the island’s financial officials have a message for hedge funds and others who might get grumpy with a flood of nosy scribblers: don’t muss us.

Among the presentation tips for dealing with “surprise” or uncomfortable encounters, the island’s Portfolio of Finance & Economics sent around this week:

–Remain calm and pleasant.

–Keep eye contact with the reporter.  Do not look directly into the camera, especially when speaking.

–Do not put your hands over your face or push away a camera.  And do not in any way make physically aggressive movements.

–Use bridging statements to respond to inquiries: “We are not in a position to meet right now, but would be happy to take down your questions and get back to you with answers,” which can then be provided in writing.  It’s OK to repeat this sentiment ideally, varying the phrasing: “I’m not the best person for this topic but…”

Finally (and this was not in the memo) they can hold out the hope that the media’s fascination with offshore funds will fade within a week. After all the G-20 meeting itself begins on April 2 in London and most of the producers, cameramen and scribes will reluctantly follow the story to that decidedly more inclement locale.

The advisory in full is attached below.

Four of the world’s top hedge fund managers took home 10-figure paychecks last year, even as the loosely regulated industry delivered its worst returns and hundreds of firms were forced out of business.

The industry’s 25 best-paid managers collected a total of $11.6 billion, which marked the third-best year on record, according to an annual survey released by Institutional Investor’s Alpha magazine. Top on the list was James Simons, a former mathematics professor who runs hedge fund group Renaissance Technologies, with estimated earnings of 2.5 billion.

The total number, however, marks a sharp decline from the $22.5 billion that the industry’s best performers took home in 2007. Analysts had expected the overall decline after the average hedge fund lost 19 percent and its size shriveled because investors pulled out roughly $150 billion in assets.

Click here to read more of the Reuters story by Svea Herbst-Bayliss.

There's no shortage of ill will towards bankers at the moment.

But some executives in the private equity and hedge funds industries feel they are getting beaten with the same stick by politicians and the public, despite feeling relatively blameless in this crisis.

BC Partners managing partner Andrew Newington, speaking at the Reuters Hedge Fund & Private Equity Summit in London today, explained.

"There is clearly no political goodwill towards financial services in general and everyone within financial services is being lumped into the same bucket," he said.

"So whether you're an investment bank, whether you're Fred Goodwin, whether you're a private equity firm or hedge fund, it doesn't matter, you appear on a placard at Canary Wharf with a noose around your neck, which isn't a very pleasant prospect."

The once-booming hedge fund industry has shrunk rapidly over the past 9 months to roughly $1-$1.4 trillion, as investors have pulled out their cash following some pretty lacklustre returns.

However, according to Mark Kary, chief executive of Polar Capital, the industry never really deserved to have grown to the best part of $3 trillion in the first place.

He told today's Reuters Hedge Fund and Private Equity Summit in London that while hedge funds had become a "fashion item" in the good times, when it comes down to it there simply isn't enough talent to support an industry of $3 trillion.

    "This went from a $400 billion business to a $3 trillion business in the space of seven years and I just don't think there's enough talent around to be able to do that," he said.

"The idea that you can have 10,000 hedge funds all with a short book, all with a long book, all risk managing and all doing it supremely well is ... absolute nonsense. It's a skill set that only a very small number of people can execute properly."

Some managers, such as John Paulson or Hugh Hendry, have performed very well through the crisis, but they are in the minority.

For many in the industry, who set up when times were good and then rode a rising time in all markets, it seems Kary is onto something.

For all the political noise about hedge fund regulation, today's Turner review looks like a relatively easy set of rules for the industry to stomach.

In his 126-page document, mostly about the banking sector, FSA chairman Adair Turner says the watchdog will demand more information from hedge funds and says regulators should be able make rules in areas such as capital and liquidity if hedge funds start to pose systemic risks or become "bank-like" in their activities.

And while Turner points out hedge funds can pose systemic risks, he notes the FSA's already-extensive regulation of hedge fund managers.

Significantly, he clearly draws a distinction between the activities of hedge funds and banks, pointing out that hedge funds have tended to be much less leveraged.

Hedge fund industry executives believe they can live with disclosing more information to regulators, which mirrors proposals put forward last month by AIMA, a hedge fund industry body. AIMA, the PWG and the MFA have also written to the Financial Stability Forum, committing to work together towards global standards.

Some leveraged credit strategies could see returns hit under the proposals, which could make them sit on extra cash, but this is relatively small proportion of the industry.

Next month will be key for hedge funds, as G20 leaders meet in London on April 2 and the European Union proposes binding rules on April 21. If the industry can escape with new disclosure obligations or with caps on prime broker borrowing -- a suggestion made by many in the industry -- then AIMA will be able to claim a major success in seizing the initiative in the hedge fund debate.

Another day and another report of a company looking to exit its hedge fund operation.

According to a report in today's FT, Germany's Commerzbank has put its $900 million fund of hedge fund manager Comas up for sale, although it may close it down if no buyer is found.

Only last week Spanish bank BBVA said it would close down its alternative investment businesses, including hedge funds, and give investors their money back.

It is unlikely to be the end. A report this week from Hedge Fund Intelligence, whose estimates for the size of the hedge fund industry tend to be at the higher end of the scale, said global assets fell more than 30 percent to just over $1.8 trillion at the end of last year, but further redemptions mean this figure will already be lower, putting further pressure on hedge fund-related businesses.

The FT's report says Commerzbank is already in talks with funds of hedge funds and family offices about a deal.

In this environment there are bound to be some good assets coming up for sale at attractive prices.

The issue is, who has the financial strength or inclination to take advantage?

Most hedge funds agree that the credit crisis has thrown up some interesting assets at bargain-basement prices, particularly in credit markets.

The problem? When you have to report net asset value performance to jittery investors and prices of these cheap assets are getting even cheaper, when do you buy?

That's the dilemma facing many fund managers, some of whom have got burned by snapping up asset-backed securities and other assets too quickly.

After all, a security that has fallen 90 percent is one that has dropped 80 percent and then halved.

Chris Woods, chief investment officer at Man Global Strategies, speaking at Wednesday's Euromoney bond conference in Westminster, helps us out.

"Just as 50 is the new par, so early is the new wrong," he says.

As investors have found, it may be cheap, but it could get a lot cheaper.

It may not have been a massive surprise, but ECB President Jean-Claude Trichet had an unwelcome message for hedge fund managers today.

The current crisis is, apparently, "a loud and clear call" to roll out regulation to all important market players, "notably hedge funds and credit rating agencies".

For those hedge fund managers who felt, perhaps with a degree of justification, that their industry had been relatively blameless in precipitating the current crisis, that call may have been somewhat quieter and more muffled.

But the drumbeat of those calling for greater hedge fund regulation is growing and it seems increasingly likely that hedge funds will face a new raft of rules in the not too distant future.

Hedge funds have attempted to justify the slow take up of volunatry codes aimed at staving off heavy-handed regulation, but day-by-day the industry looks like it may have missed the chance of a quiet life... well, relatively speaking.

There seems to be an endless wave of bad news hitting the hedge fund industry at the moment -- gates and suspensions, record poor performance, the Bernard Madoff scandal and so forth -- but there are still one or two reasons to be positive.

According to a survey of institutional investors by alternative assets data group Preqin, conducted in January (and therefore after the alleged Madoff fraud came to light), only 8 percent said they were no longer confident about hedge funds and would reduce investments.

By contrast, 26 percent said they would be increasing their allocations this year.

This appears to be a more positive picture than for high net worth individuals, who, according to some anecdotal evidence, have become more cautious on hedge funds.

Institutions such as pension funds, in contrast, tend to have time horizons running into decades, so a year of bad performance is not necessarily the be all and end all.

They have also seen equities, which constitute a far greater portion of their portfolios, plummet last year, leaving hedge funds, relatively speaking at least, looking quite good.

Having followed wealthy individuals into hedge funds and helped fuel the industry's massive growth of recent years, they could end up supporting it through the difficult times.

But the survey also highlights some less appealing trends for hedge fund managers.

The industry's lucrative 2 and 20 fee structure looks more and more under threat, with around 35 percent of institutional investors saying they felt more confident to negotiate fees.

And some investors in the survey said they would no longer invest in funds of funds because they didn't think they were value for money.

For a section of the industry already under pressure -- for performing even worse than single-manager funds, after a huge rise in the dollar hit cash reserves and because some fund selectors failed to spot Madoff -- this is yet another ominous sign.