What was the name of the hedge fund whose 1998 collapse threatened global financial stability?

Long-Term Capital Management was the hedge fund whose 1998 collapse threatened global financial stability.

LTCM was founded in 1994 and used highly leveraged, model-driven strategies to profit from small pricing differences in financial markets. Its partners included prominent traders and economists, including Nobel Prize-winning economists Robert Merton and Myron Scholes.

The Russian financial crisis of August 1998 caused markets to behave in ways that LTCM’s models had not anticipated. Losses mounted, investors withdrew, and the fund’s enormous leverage raised fears that a disorderly liquidation would spread through banks and other counterparties.

The Federal Reserve Bank of New York helped arrange a private-sector rescue in September 1998. The government did not directly bail out LTCM, but major financial institutions provided capital and took control of the portfolio. The episode became a landmark warning about leverage, interconnected derivatives, and overconfidence in mathematical risk models.