The Serious Fraud Office today launched an investigation into the London operations of alleged fraudster Bernard Madoff.

Celebrity hedge fund managers like Nicola Horlick and Arpad “Arki” Busson could be drawn into the probe into the alleged $50 billion (£32.9 billion) Ponzi scandal. The SFO said today it is launching a wide-ranging inquiry after yesterday receiving a report on the British end of the world's biggest fraud.

Having read that report by forensic accountants at Grant Thornton acting as liquidators for the London part of Madoff's investment empire, SFO director Richard Alderman immediately put his investigators on the case. The City of London Police are already looking at it, but the SFO said its probe will be broadened to take in information from anyone with links to Madoff.

“The public say they want us to take early action and this is what we are doing,” said Alderman. “We will work closely with other law enforcement agencies to discover the truth behind the collapse of these huge financial structures and we ask for help from ex-employees and others.”

A spokesman for the SFO said it is calling on investors and others involved with Madoff to come forward.

A broad probe of Madoff “stakeholders” would include so-called City superwoman Horlick who put 9.5% of investments in her Bramdean Alternatives hedge fund into Madoff schemes. It would also include Busson, pin-up boy of the London hedge fund scene, as famous in the City as he is in the gossip columns for squiring Hollywood star Uma Thurman, having previously shared his life with supermodel Elle Macpherson. Busson's EIM firm was taken for $230 million in the scam.

Other London hedge funds hit by the scandal include RAB Capital, backed by Lakshmi Mittal, Britain's richest man, and London's biggest hedge fund group Man Group, thought to have lost up to $360 million. The investigation will also look into the role of London-based “feeder funds”, which may have pumped hundreds of millions of pounds in savings from Britain's wealthy into Madoff funds.

They include Fairfield Greenwich, said to have lost $7.5 billion in the fraud. Fairfield's Mayfair offices are just round the corner from Madoff Securities International's Berkeley St HQ.