Investors disillusioned, but not defrauded

A friend who is a securities lawyer writes:

I wanted to respond to your post and Jim Manzi's about the burgeoning "hedge funds are nothing more than a giant odds-playing scam" meme. Regardless of your views on the EMH, that meme is completely ignorant of the way the legal and market regimes governing hedge funds actually work. Maybe their investment ideas don't work as well as they'd like, but (a) investors generally know what the funds' investment strategies are, and (b) they think they work. Maybe delusions, but few scams.