If M&A had a lemon law, the sovereign wealth funds could make a pretty good case for the U.S. courts.

Temasek Holdings, which runs a $134 billion portfolio for the government of Singapore, for example, lost billions on Merrill Lynch & Co., while China Investment Corp., or CIC, poured $3 billion into the Blackstone Group ahead of the firm’s IPO. The private-equity firm’s shares have fallen from $31 to as low as $3.55.

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