Its not quite as simple as portrayed here. You can see a thread of what happened to GS by looking at the yen chart. You see that huge spike on 8/16? Corresponds with the equites capitulation. That's the day after the deadline for hedge fund clients to submit requests for withdrawal of funds at the end of the third quarter. A couple days before that is when GS had to come out and say that they were suffering unprecedented losses GA/GEO/NEO funds. The Yen is the universal funding source on this planet. They borrow againt the yen and invest in highly leveraged 'ideas'. That repayment in the yen was fueled by GS among others having to free up funds to give money back to folks who started to worry that they would lose it all. They may have come out of it alright if they were able to just keep managing the funds they had, but having to get out of losing positions right at the puke point - when rookie traders (their clients) want to bail - puts even a top fund manager in an impossible situation. That's not a defense. They have to deal with that dynamic as a risk when taking positions. They failed and now it's that dynamic that is ultimately, and ironically, stomping the P&L.
The fund targets a 20% a year return. That means it will be three years before they get back to the high water mark and can start earning large fees again.
There's never an excuse for taking on losses of this size, especially when managing a fund this large. It boils down to risk control, or lack thereof, and its unacceptable. The fat cats will still get paid, and the investors, as always, lose their shirts. Buyer should always beware.