On a day some traders dubbed "Arbageddon," hedge funds who bet on big corporate takeovers, known as arbitragers, suffered their worst rout in years after two deals fell apart and regulators indicated they may take steps to stymie others.

In a rapid-fire series of moves over the course of 24 hours, 21st Century Fox dropped its $80 billion bid for Time Warner and Sprint Corp abandoned its plans to acquire T-Mobile US, Walgreen wrong-footed other traders by deciding not to move offshore to lower its taxes once it buys Alliance Boots, sending its shares tumbling. And President Barack Obama said his administration was taking a close look at the controversial tax-driven mergers that helped fuel the recent mergers boom.