What was the name of the U.S. hedge fund whose 1998 collapse shook global markets?

Long-Term Capital Management was the U.S. hedge fund whose 1998 collapse shook global markets.

LTCM was founded in 1994 and employed sophisticated arbitrage strategies. Its partners included prominent traders and economists, including future Nobel Prize winners Myron Scholes and Robert C. Merton. The fund used very large amounts of leverage relative to its capital.

The Russian government’s August 1998 default intensified a global flight from risky assets. Market relationships that LTCM’s models expected to remain stable moved dramatically instead, producing large losses. Because major banks and investment firms were LTCM counterparties, an uncontrolled liquidation was feared to threaten financial stability.

The Federal Reserve Bank of New York helped coordinate a private-sector rescue in September 1998; the government did not directly provide the bailout money. LTCM was later wound down. The episode became a lasting example of how leverage, crowded trades, and interconnected derivatives can amplify a market shock.