Despite nearly bringing the global markets to a halt in the summer of 1998 with the collapse of their $4.4 billion hedge fund, many of Long Term Capital Management’s former partners and traders are having the best years of their careers.

Founded in 1994 by John Meriwether, a former vice-chairman at Salomon Brothers, Long Term Capital Management’s profits were enormous, even by the standards of the late 1990s.

In 1995, the fund gained 42.8% with the help of massive credit lines from dealers and commercial banks, which would ultimately prove to be the fund’s undoing.

By 1998, the LTCM’s $4 billion in capital controlled more than $200 billion in positions in global bonds and futures.

But when Russia refused to make an interest payment on its debt in the summer of 1998, the global bond markets effectively shut down as massively leveraged hedge funds and Wall Street dealers, many with identical trades in their portfolios, simultaneously tried to sell their positions.

Long Term Capital Management was hit with massive sell-offs in all the asset sectors in which it operated as dealers and banks, having suffered sharp losses, began to call in lines of credit.

The New York Fed engineered a $3.62 billion buyout of LTCM in the fall of 1998. It shut down in May of 1999, putting some 50 traders out of work.

Wall Street is generally hesitant to hire traders who have been associated with scandal or controversy.

“It’s harder to get a higher media profile than the LTCM crowd. These guys pretty much turned capitalism on its ear in 1998, cost millions in bonuses, and forced thousands of layoffs,” said an executive recruiter who has worked with several ex-LTCM executives who wished to remain anonymoous.

However, Wall Street wasted little time in hiring the fund’s “rank-and-file” traders. One fixed-income chief at a dealer who hired an ex-LTCM trader said: “The one thing you never have enough of is good traders. On top of that, you never have enough traders who have been trained to think originally. The fact that these guys have risen to the top of the heap is not very surprising, since they are generally profitable in all sorts of markets.”

Former Long Term Capital Management traders oversee a good deal of the day-to-day life in the fixed-income trenches of Wall Street. Matt Zames, a former mortgage-backed security trader at the fund, now runs “liquid products”- swaps, agencies, MBS and government bonds – at Credit Suisse First Boston. Mike Reisman, who ran the LTCM’s giant repurchase agreement operation, now does the same for Deutsche Bank. Buddy Robinson traded swaps for LTCM and now runs Lehman Brothers swaps operation.

Many of his former colleagues point to Frank Berrito as the ultimate Long Term Capital Management trading success story, something that he doesn’t deny.

“The time I spent there was invaluable,” said Mr. Berrito, who now runs high-yield trading, sales and research for Bank of America Securities. “They hired me and I was just 26. I could walk up to the most famous traders in the world and ask them what they thought of a trade, and I was forced to look at [high-yield] trades versus all sectors of the bond market.”

Mr. Berrito said Long Term Capital Management was “a great breeding ground [for traders] because they were very rigorous in their interview process. It took about four months for them to hire me. They were looking for something different, I guess, since they were already long on academia.”

Long Term Capital Management had dozens of mathematical, finance and science Ph.Ds on staff, including 1997 Nobel winner Myron Scholes, co-inventor of modern option pricing theory.

Deutsche Bank’s Mr. Reisman said Long Term Capital Management’s flat management structure and collegial atmosphere encouraged asking people like Larry Hilibrand and Victor Haghani – legendarily profitable bond arbitrage traders – a lot of questions.

“Since everyone had some academic background, spending a lot of time reverse-engineering a solution was considered a fine use of time,” said Mr. Reisman. “This did not happen in a lot of dealers that I was aware of.”

One former Long Term Capital Management partner who decided to for sake trading for a different path to profits is the CEO and chairman of hedge fund back-office and administrative services provider GlobeOp, Hans Hufschmid. Mr. Hufschmid said, “When I left [the fund] in May 1999,I wasn’t sure I wanted to trade anymore. I’d been trading since 1985, when I came to Salomon, and for obvious reasons, I was pretty burnt out. This opportunity came along and it looked interesting.”

Several of Mr. Hufschmid’s former Long Term Capital Management partner partners told The New York Sun they thought he had been the biggest financial success of all the former fund managers.

“His company is valued around $350 million, which is pretty good work, considering that he lost millions when the fund went out, and that he built what he did in about four years.” Mr. Hufschmid declined to comment on GlobeOp’s income.

Meanwhile, LTCM’s former Japanese arbitrage trader, Carl Huttenlocher, said the primary benefit from his time there include “The education about risk. A good trade in Japan may not be a good trade all-around due to other considerations. [LTCM] taught me to think about the diversity of risk.”

Mr. Huttenlocher, who currently heads up a five-man Japanese and Asian investment portfolio team for $4.5 billion New York-based hedge fund Highbridge Capital Management in London, said: “I used to think there was an opportunity cost to having spent a few years there, but I now think that the experienced I gained outweighs that now.”

One of the founding partners, Greg Hawkins, is more tempered in his recollections. “I am proudest of the fact that no one ever accused [the LTCM partners] of anything illegal and unethical,” he said from his base at Caxton Associates’ Greenwich, Conn., offices, where he runs a relative-value bond portfolio with another Long Term Capital Management alum, Jim McEntee.

Mr. Hawkins said traders and investors were for the most part unaware of the size and risk of LTCM’s bets.

“We weren’t too transparent there,” he said. “At LTCM, we viewed the balance sheet sort of like how we viewed it at Salomon – as that of a large financial institution. Jim and I don’t make those large, macro bets any more, and are more nimble.”

LTCM’s founder, John Meriwether, and five of his former partners, Richard Leahy, Eric Rosenfeld, Victor Haghani, Lawrence Hilibrand and Arjun Krishnamachar, started JWM Partners, a fixed-income arbitrage hedge fund in Greenwich, Ct.

The fund manages approximately $1 billion and reportedly returned about 15% last year.