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Ahead of its Q2 results later this week, the news flow is not good for Bear Stearns. The bank has found itself caught up front and centre in the attack by a group of US hedge funds, led by Paulson, on banks which sell derivative contracts backed by subprime mortgages.

Now the Wall Street Journal reports that those pesky subprime mortgages (again) have done damage, with a hedge fund managed by the bank down almost a quarter from the start of the year to late April. The fund, called the High-Grade Structured Credit Strategies Enhanced Leverage Fund, is widely exposed to subprime mortgages, the paper says. It has $600m under management, but borrows heavily to make bigger bets.

One bit of good news: the fund’s losses, however large they might be, should have a limited impact on Bear, with the business and a group of individual executives investing $40m in the fund and the majority coming from outside investors.

Elsewhere, Hedge Fund Daily reports that, ironically, Bear is also getting stick for the services it provides to its very detractors - the hedge funds. “Bear Stearns has missed out on the recent growth in the hedge fund industry and is seeing more attrition because they don’t have the global breadth, balance sheet or technological savvy of Morgan Stanley or Goldman [Sachs],” Tabb Group senior analyst Adam Sussman is quoted as telling Associated Press.

For its part, Bear Stearns, says AP, acknowledges past problems but says it has been addressing them, beginning last summer when it reorganized to merge prime brokerage functions in with equities as a way to better service hedge funds while Bruce Lisman and Steve Meyer, who co-head global equities, wrote in an internal memo obtained by AP that the firm “feel[s] good about the direction of our prime brokerage business.”

Next up are the quarterly results on Thursday which may determine if Bear is truly set for a Iunius horribilis.