[JURIST] A federal judge on Monday sentenced Samuel Israel, III, co-founder of collapsed hedge fund Bayou Group [JURIST report], to 20 years in prison. US District Judge Colleen McMahon also ordered Israel to make $300 million in restitution and forfeit interests in a $100 million account. In 2005, both Israel and Chief Financial Officer Daniel Marino pleaded guilty [JURIST report] to charges that included mail fraud, wire fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud.

Bayou was only one example of what authorities say is a growing amount of fraudulent activity involving the loosely regulated hedge funds. Securities and Exchange Commission Chairman Christopher Cox has consistently urged Congress to permit the SEC oversight over hedge funds [JURIST report], saying that regulation is necessary to protect retail investors and prevent fraud. Reuters has more.