Connecticut, home of Amaranth Advisors, the Bayou Group and hundreds of other (less infamous) hedge funds, is cracking down. The state’s Department of Banking has set up an oversight unit to detect and prevent fraud in Nutmeg State-based funds, and may issue new, stricter regulations. Along with New York and London, Connecticut is a major hedge fund center and it is unclear what effect the new regulatory division will have on that status. Currently, the banking department regulates hedge fund advisers with less than $25 million and has anti-fraud authority over larger funds. The department’s move came after a measure creating an anti-fraud unit failed to pass the state legislature, and as state Attorney General Richard Blumenthal has stepped up his campaign for tighter federal regulations. “We have an SEC that doesn't seem to stop at anything,” banking department securities director Ralph Lambiase explained to Investment News. “Our responsibility is to protect the public and make sure that the hedge fund industry stays healthy and vital.”