Systemic risk is a pervasive danger in the finance world, once thought largely theoretical. But 2008 proved just how real a threat it can be to economic stability. The dangers inherent in prime finance - the business relationship between prime brokers and their clients, namely hedge funds - increase the likelihood of a domino-like collapse of major financial institutions. When Lehman brothers collapsed in late 2008, Hedge funds using Lehman as a prime broker found themselves unable to withdraw assets. With redemptions mounting, high-leverage bets costing them millions and with a bleak economic outlook, many of these hedge funds were strapped for capital and forced to close their doors. When prime brokers fail is a detailed look at the relationship between Hedge funds and their brokerages and the risks that can multiply in extraordinary markets. Often over-simplified, this relationship has been the source of unexpected risk for banks lending to hedge funds, as well as for the funds with assets held at struggling banks.