Which 1998 hedge fund collapse intensified fears after the Russian financial crisis?

The 1998 hedge fund collapse that intensified fears after the Russian financial crisis involved Long-Term Capital Management.

LTCM used mathematical models, large positions, and substantial borrowing to pursue arbitrage and other strategies. Its founders included prominent traders and two Nobel Prize–winning economists, Myron Scholes and Robert C. Merton. After Russia’s August 1998 default and devaluation, investors fled risky assets and market relationships that LTCM’s models expected to hold broke down.

The Federal Reserve Bank of New York helped coordinate a private-sector recapitalization in September 1998. The central bank did not directly bail out LTCM; major banks and investment firms supplied the rescue package because an uncontrolled liquidation could have destabilized already nervous markets. The episode became a classic warning about leverage, crowded trades, model risk, and the financial connections among institutions. It is often called a market crash, but LTCM itself was a hedge fund failure within the broader 1998 financial turmoil.