Hedge fund probes steal attention from banks' record bonuses, stingy lending

Bailed out with taxpayer funds just a year ago, major U.S. investment banks may again be gearing up to hand out record bonuses. But as the public outrage builds, authorities seem to be betting that a theatrical crackdown on the hedge fund industry will calm the widespread anger about Wall Street's excesses.

Federal investigators are again widening their investigation into the $1.2 trillion hedge fund industry. Last week, reports surfaced that authorities have gotten a former employee to serve as a cooperating witness and provide information about hedge fund giant SAC Capital Advisors. Richard Choo Beng Lee, who worked at SAC between 1999 and 2004, will tell authorities about transactions by other SAC traders, according to The Wall Street Journal.