Hedge fund kingpin and mega-art collector Steve Cohen should be chilling out at Art Basel Miami right about now, eyeing the overpriced artwork he plans to add to the ridiculous $700 million collection that sits inside his ridiculous Greenwich compound. But it's unlikely the billionaire hedge funder is having a very good day. The painfully embarrassing lawsuit filed by a former employee of Cohen's SAC Capital in 2008—which involves, among other things, sexual harassment, sodomy, female hormones, and forced cross-dressing—has finally been unsealed for all to see. And it's quite a doozy, needless to say. [Dealbreaker]

The growing insider trading scandal involving hedge funds has made its way to the offices of SAC Capital, the firm founded by one of the industry's most powerful figures, Zamboni-loving billionaire Steve Cohen. One of the 14 new defendants charged today, Richard Choo Beng Lee, seems to have started his crime spree when he was employed by SAC. [BI, Reuters]

Another 14 people have been implicated in the growing investigation into insider trading by hedge funds. A number of the people indicted today have ties to Raj Rajaratnam, the founder of Galleon Group who was arrested a couple of weeks ago; all of them, it's safe to say, just had their days ruined. [WSJ]

Galleon Group, the hedge fund founded by Raj Rajaratnam, the man at the center of the insider trading scandal that has rocked Wall Street in recent days, is shutting its doors. (Apparently, investors get a bit nervous when they see the CEO of the hedge fund they've invested in get hauled away in handcuffs and quickly ask for their money back.) Galleon is now reportedly looking to sell off the firm's assets, so if you're looking to pick up a hedge fund on the cheap, you probably should email to Raj as soon as possible. Oh, and yes, we tested out Raj's email address a few minutes ago and it still appears to be operational. So you're all set on that front. Do be sure to let us know how your negotiations go, though. [NYT]

Billionaire businessman Raj Rajaratnam is out on bail, so he stopped by Galleon Group, the hedge fund he founded in 1997, to give a pep talk to the staff. Things aren't going so well over there!

Bernie Madoff is the financial criminal of the past. Billionaire hedge fund chief Raj Rajaratnam is the financial criminal of the moment! Slick back your hair, watch Wall Street, and forget Ponzi schemes—insider trading is back, big time!

Billionaire hedge funder Raj Rajaratnam was arrested on Friday morning on charges he participated in one of the biggest insider trading schemes in recent memory, one that netted him at least $25 million (but possibly millions more since the investigation continues.) Fortunately for Rajaratnam, the high-profile bust didn't end up depriving him of a weekend of freedom. By the end of the day, he'd been released on $100 million bail—the highest in history—and had to give up his passport and agree not to travel more than 110 miles from New York City. And today? He was back in the office for what must have been the awkwardest Monday morning meeting ever, telling employees that he's innocent and plans to fight the charges against him.

Raj Rajaratnam, the founder of the $7 billion hedge fund Galleon Group, the 551st richest man in the world according to Forbes, and America's one and only Sri Lankan billionaire, has been arrested and charged for taking part in a $20 million insider-trading scheme. [NYT, WSJ]

Having some difficulty landing a job? Maybe you should consider starting your very own hedge fund! Contrary to conventional wisdom, it's a pretty good time to get started. And Business Insider has assembled a step-by-step guide to make the process that much easier. Just be sure to pick an appropriate name for your new fund—try to avoid words or historical events ("Ground Zero," "Auschwitz") that might conjure up negative thoughts, if at all possible—and you'll be good to go. [Business Insider]

Don't be shocked if you notice what has been an endangered species until recently—the elusive banquette-dancing, champagne-swilling hedge funder—make a comeback in the coming months. Hedge funds "had nearly $20 billion pour into their coffers last month, as investors flocked back amid revived market optimism." Or take the glass-half-full approach and focus on the positive chalk up the news to more evidence the recession is over. [Dealbook, HedgeFund.net]

Leave it to a former employee of Lehman Brothers to come up with the worst name for a hedge fund ever. Edward Filippi, who once sold commodity investment products for Lehman, is the founder of Ground Zero Strategic Commodities: "Putting the words 'ground zero' in a hedge fund name may disturb many people, as it undoubtedly conjures up images of the site where the World Trade Center was destroyed nearly eight years ago." You think? [NYT]

If you were thinking the recent spate of Ponzi schemes has convinced investors to do a bit more due diligence before handing over their cash, think again: A group of a dozen hedge funds have filed a lawsuit against a California businessman named Todd Ault, who they accuse of taking the $4.2 million they gave him for a stock trading venture and instead investing it in a "swingers ranch" in the Catskills. We're thinking Ault's MySpace page should have been a tip off, but feel free to decide for yourself. [NYDN]

Maybe he should have stuck with hockey. Tim Barakett, the founder of Atticus Capital and possibly the only hedge funder in history to turn down an opportunity to play professional hockey to go Harvard Business School, announced today that he's shutting down his flagship fund and handing $3 billion back to his investors. "After 15 years of being singularly focused on building and managing Atticus, I believe it is time to reassess my future," Barakett said in a letter to investors. On a more positive note, you can rest assured Steve Cohen's hockey rink will see a lot more action over the coming months. [WSJ]

A hedge fund is the worst possible place to get embroiled in a workplace sexual harassment suit. Hedge funders are ruthless and insane. A harassment suit at one hedge fund is now also an extortion case. With nude pixxx!

As the public focuses on the lucky bankers at Goldman Sachs who are on track to make more money than ever this year, let's not forget about hedge fund managers. They're doing pretty well, too, you know! According to a new report by Hedge Fund Research, the average fund was up more than nine percent during the quarter, the best quarterly return since the fourth quarter of 1999. So if you see a cocky finance type out and about and he's buying bottles of champagne like the last year never happened—or waving a wad of cash—he could work at Goldman. But he could just as well be employed by a hedge fund. It still remains highly unlikely, however, that he works at Citigroup. [Dealbook]

You may still be dealing with the nasty effects of the economic downturn, but the pain and misery appears to be over for the hedge funders who were forced to momentarily put off plans to buy a new jet or private Caribbean island earlier this year. The Post reports the first six months of 2009 were very good for the likes of Steve Cohen, Paul Tudor Jones, Phil Falcone, and John Paulson as "hedge funds overall turned in their best performance in a decade, with funds up 12 percent through the end of June." Before you immediately brush this off as just another example of the rich getting richer while the less fortunate continue to struggle, consider four reasons why it's actually great news that Phil Falcone may end the year with a net worth north of $3 billion:

• There's a shortage of banking industry CEOs—decent ones, at least—which explains why Vikram Pandit is still in charge at Citigroup and Ken Lewis is still running the show at Bank of America. "The best players won't risk their careers going to a troubled enterprise," explains one recruiting expert. [WSJ]
• Andrew Cuomo has been investigating pension fund corruption for the past few months. Now his own ties to just such an entity are raising questions. [BN]
• Wanna invest in a hedge fund? You're in luck. A number of them are looking to diversify their investor bases and are now targeting the middle class. [NYP]
• Stocks rose this morning ahead of a report by the Fed this afternoon. [CNN]
• Good news for JPMorgan Chase: It's "the world's strongest bank." [DB]
• Good news for Barclays: Its name will grace a Brooklyn subway station. [NYT]
• Jeffry Picower was once considered one of Bernie Madoff's victims. Not so much any longer, now that it appears he withdrew as much as $5 billion from his various Madoff accounts between 1995 and 2008. [ProPublica]

Oh, sweet irony: "The hedge fund that kicked Veronica Hearst out of her Palm Beach mansion and forced Elizabeth Taylor and Kathy Ireland to bankrupt their jewelry business through predatory financing is now in some trouble of its own." [Dealbreaker]

William von Mueffling, the hedge funder who left Lazard in 2003 to found Cantillon Capital Management—and who had quite the run during the boom days, taking home $250-300 million in 2007—is shutting down his funds due to "ongoing turmoil in the markets," according to the Journal. Expect slightly uncomfortable conversation with Pete Peterson and Felix Rohatyn in the elevator of 810 Fifth later this evening. [WSJ, Dealbreaker]

"Investors say they are getting more promotional material from hedge funds than ever before, as funds seek to replenish assets withdrawn or lost because of negative performance during the financial crisis." Does this mean you may find Dan Loeb shoving a flyer under your door in the near future? Not necessarily. But you probably shouldn't rule it out either. [Reuters]