Which hedge fund’s 1998 rescue became a landmark episode after the Russian financial crisis?

Long-Term Capital Management became the landmark hedge-fund rescue episode after the Russian financial crisis of 1998.

LTCM was founded in 1994 by John Meriwether and included prominent academics and financial experts. It used highly leveraged trading strategies that depended on relationships between securities behaving as expected. The Russian default and resulting flight to safer assets disrupted those relationships and caused large losses.

By September 1998, the Federal Reserve Bank of New York coordinated a private-sector recapitalization involving major banks and investment firms. The Federal Reserve did not directly provide the rescue money, but officials feared that an uncontrolled LTCM collapse could destabilize already fragile markets.

The episode became a classic example of leverage and systemic risk. LTCM’s difficulties were not themselves the Russian stock-market crash, and the rescue was not a government takeover. The fund was eventually wound down after its positions were reduced and its creditors were repaid.