[JURIST] Leading Tuesday's corporations and securities law news, the Arizona Attorney General's office [official website] has announced that $101 million it seized earlier this year may belong to failed hedge fund company Bayou Management. The Connecticut Attorney General's office said last week that Bayou may have misplaced $440 million of investors' money [JURIST report]. Arizona's AG said the state seized the money from a Wachovia [corporate website] bank in Phoenix in May because it appeared to be used for fraud. The news comes as Bayou's collapse prompts some to worry [Financial Times report, subscription required] about the future of the $1 trillion hedge fund industry . Reuters has more.

In other corporations and securities law news…

• Former Kmart [corporate website] and Newell Rubbermaid [corporate website] executives have settled with the SEC over charges that they helped Kmart fraudulently account for vendor allowances. Three of the four executives paid fines totaling $90,000; the fourth was not fined because of his cooperation. Last week, the SEC brought related charges against other former Kmart executives [JURIST report] for fraudulently hiding excess inventory. Reuters has more.
• Microsoft [corporate website] says that it may soon face legal threats over its security problems. In an SEC filing, the software giant said that because of rampant worms, viruses and other malicious software, the company could face legal problems in the future, despite its efforts to limit liability. The filing also said that the company spent over $2 billion on legal fees in the last year. TechWeb has more.