[JURIST] Bayou Group hedge fund founder Samuel Israel, III and Chief Financial Officer Daniel Marino on Thursday pleaded guilty to fraud charges for their roles in a scandal that has led to the collapse of the fund [JURIST report] and wiped out investors' money. Both Israel and Marino pleaded guilty to charges that included mail fraud, wire fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud. Bayou is the most recent example of what authorities say is a growing amount of fraudulent activity involving the loosely regulated hedge funds. Hedge funds currently manage $870 billion in assets in the US, up from less than $300 million five years ago. Earlier this month, SEC Chairman Christopher Cox said the agency would implement a rule [JURIST report] that would allow the government to take a stronger role as watchdog over the hedge fund industry. AP has more.