The collapse of Lehman Brothers and other banks' share-price plunges have been widely laid at the door of unscrupulous hedge funds. The Financial Services Authority (FSA) has also jumped on the bandwagon by banning the short-selling of shares in financial firms - a step funds insist is unnecessary and damaging.
Paul Lockstone, MD of financial comms at Edelman UK, defended hedge funds. He said: 'Short-selling is not at the root of recent events. Ultimately if there had not been underlying problems within the likes of Lehman and HBOS, they would not have been forced to take the actions they did'.
But such arguments have cut little ice with the public, as newspapers complain about the 'spivs and speculators' that have destroyed the global financial system purely to satiate their greed.
The FSA's controversial decision to curb short-selling - which may yet become permanent - is thought to have been directly influenced by this negative type of PR.
'There is certainly an element of the "something must be done" school of regulation in relation to the short selling restrictions,' said Lockstone.
Some believe the industry has brought this situation on itself. Writing in last week's PRWeek (26 September), Evening Standard's City commentator, Anthony Hilton argued hedge fund managers have 'failed to appreciate that hostility breeds hostility'.
Some funds have traditionally been reluctant to engage with the press as the more they are criticised the less keen they are to speak publicly. Others are solely aimed at institutional investors and have felt little need for a comms operation.
'These guys have done very little to explain themselves and it is now way overdue,' said one senior agency source.
Eoin Brophy, partner in Hume Brophy, and comms consultant to the Alternative Investment Management Association, argued that the media coverage for hedge funds has actually improved over the past couple of years, but acknowledged the industry needs to do more.
'The fact that politicians and policymakers are also influenced by the more tabloid-style press shows that the industry at-large needs to pay more attention to educating and engaging the mainstream media,' said Brophy.
HOW I SEE IT - CHRIS STEELE, MD, ADVENTIS FINANCIAL
In the past hedge funds may not have thought of PR as important, but we have now seen that negative press can provoke knee-jerk reactions from regulators. In that respect hedge funds now have to stand up and explain themselves in the same way that private equity houses have in recent years learned to get to grips with the media.
Their big problem is that the name 'hedge fund' has been usurped by those simply running trading funds. Legitimate hedge funds have a major task to educate the world about what they do and why most of their trading activities are completely irrelevant to this crisis.