NEW YORK (CNNMoney.com) -- Moody's Investors Service is tackling the hedge fund industry by publishing its first public rating of an individual hedge fund's risk, according to a report in The Wall Street Journal.

In the wake of some public scandals at hedge fund firms like Bayou Management LLC and Wood River Capital Management LLC, Moody's new rating serves to shine some light on an industry that has long been loosely regulated by the government despite its rapid growth in recent years.

New York-based Sorin Capital Management LLC became the first hedge fund to receive a rating under Moody's newly developed system. The fund, which manages $335 million in investor money, received a rating just one notch short of Moody's highest "operational quality" rating based on the fund's back office administration, regulatory compliance, risk reporting and control, legal and financial structure and human resources criteria.

It's a departure in the criteria Moody's uses to rank companies and mutual funds, which generally relies on the quality of a company or fund based on the likelihood it will default on its debt. Hedge funds, however, keep their strategies and risks close to the vest, making it difficult for Moody's to rate the funds based on investment strategies or portfolio risks.

While Sorin Capital is the first to receive a public rating, Moody's managing director Gary Witt told the Journal that the firm is in talks with other hedge funds and expects to publish another public rating in the near future.

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