Which investment fund's collapse intensified the global market turmoil in September 1998?

Long-Term Capital Management's collapse intensified global market turmoil in September 1998.

Long-Term Capital Management, usually called LTCM, was a highly leveraged hedge fund founded in 1994. Its partners included prominent traders and economists, including Nobel Prize-winning economists Myron Scholes and Robert C. Merton. The fund used mathematical models and borrowed heavily to pursue converging price relationships.

The Russian financial crisis in August 1998 disrupted those relationships. Investors sought safer assets, markets moved farther apart than LTCM's models expected, and its large leveraged positions produced severe losses. A disorderly failure threatened to transmit stress through the banks and markets that were its counterparties.

The Federal Reserve Bank of New York helped arrange a private-sector recapitalization in September 1998. The U.S. government did not provide a direct bailout, but the episode became a major example of systemic risk and the dangers of leverage. LTCM was eventually wound down rather than continuing as before.