John Paulson earned a record $3.7 billion last year to top Alpha's ranking of the 50 most highly paid hedge fund managers. The Paulson & Co. chief surpassed perennial powerhouses George Soros and James Simons, who ranked second and third, at $2.9 billion and $2.8 billion, respectively. The top 25 on the list earned an average $892 million, up from $532 million in 2006.Paulson rocketed to No. 1 in Alpha's seventh annual survey by shorting the subprime mortgage market. He, Soros, Simons and the others who earned more than $1 billion — Philip Falcone and Kenneth Griffin — led what may well prove to be the greatest display of individual wealth creation in any year in the modern history of finance.The enormous riches being generated by hedge funds come at a time of extraordinary distress in financial markets, as millions of homeowners...