As a result, Highland executives, led by co-founder Mark Okada, are engaged in an intense dialogue with investors to discourage them from withdrawing their money.

The hedge funds outfoxed the credit crunch longer than we expected them to, but it looks like the dominos are hitting them on the rear end now, too.

Dwarf toss of the day

The SEC nailed Fidelity’s Peter Lynch for accepting tickets from brokers the firm did business with. It’s part of a much bigger scandal at the Boston mutual-fund company that will cost it $8 million in fines, the WSJ says on C1. Apparently Lynch liked U2, the Nutcracker, and the Ryder Cup. That’s embarrassing, taste-wise.

The Los Angeles Times reports that Lynch knowingly violated the rules, asking Fidelity traders to solicit tickets from brokers who were seeking to do business with Fidelity, a no-no because the firm has a fiduciary duty to seek the best trading price for its clients and to not be influenced by what could essentially be viewed as bribes. Fidelity employees accepted some $1.6 million in illegal gifts.

The NYT on C1 has the best story of all the papers, with good context on industry practices as well as the history of the case. Its story also has one of our favorite ledes in some time:

Days at Wimbledon. Nights at U2 concerts. Flights aboard the Concorde.

And a dwarf to toss.

Wall Street brokers were willing to give all that and more to win lucrative business from Fidelity Investments, the world’s largest mutual fund company.

That credit crisis thing

The WSJ’s page one has a nice overview of what’s going on in short-term interest-rate markets. Long story short: they’re going haywire even more than they have been.

In one interesting anecdote, the Journal reports that the cost of insuring Citigroup debt against default is up 1,900 percent since June.

The Federal Reserve and other central banks have used a variety of measures to calm the short-term lending markets since the credit crisis started disrupting them last summer, including interest-rate cuts and special injections of cash into markets. Yet a wave of risk aversion is tightening the availability of credit even as the Fed tries to make credit more ample. That suggests new, or deeper, remedies could be in store.

“There is still very much a liquidity crisis,” says Dominic Konstam, head of interest-rate strategy at Credit Suisse. “Banks don’t want to keep lending against bad collateral when they’re worried that they’ll need the money themselves.”

Houses at everyday low prices

The LAT reports that California homebuilders are beginning to slash the sale prices of their newly constructed houses and finding that in some cases they can actually sell them. With all the bad news and economic wreckage caused by the housing bust, it’s easy to forget that it’s good news for people wanting to buy a home.

In San Bernardino County—one of the hardest-hit areas—one developer is selling its homes at a 35 percent discount.

Look out below

In economic news, the WSJ says on A2 that the Federal Reserve is likely to cut interest rates sharply again in two weeks.

A gauge of non-manufacturing activity rebounded somewhat from what the Journal called a “shockingly low” January report. The number still showed an economy shrinking, or at least not growing.

Most of the day’s other economic news was bad. Factory orders fell by the most in five months, a payroll processing firm reported fairly sharp job losses in February, and orders for non-defense capital goods (excluding aircraft) fell.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.