Bust London-based hedge fund Dynamic Decisions Capital Management is under investigation by the Serious Fraud Office.

The SFO said it has opened an investigation into the investment activities of the hedge fund run by 40-year-old Italian Alberto Micalizzi, a former PhD student at Imperial College.

The SFO said it has opened the criminal investigation following a formal referral by the Financial Services Authority, which regulated Dynamic Decisions.

The probe comes after complaints about its main hedge fund Dynamic Decisions Growth Premium Master Fund, a Cayman Islands-listed fund with $550 million (£330 million) under management.

In its five-year history Dynamic Decisions is believed to have traded from addresses in Blackfriars, Knightsbridge and Victoria. The Caymans fund was put into liquidation in May after investors, believed to include fellow London-based hedge-fund managers Strathmore Capital and Cadogan Management, raised questions about its bond holdings.

London-based accountants Hugh Dickson and Stephen Akers of Grant Thornton, who have been involved in the liquidation of the Bernard Madoff empire, were appointed liquidators of the Dynamic Decisions fund.

Grant Thornton confirmed “a number of allegations have been made as to the remaining asset value and the nature of the assets held” and the inability of the master fund “to pay a number of large redemption requests”.

Micalizzi is understood to be arguing there has been no fraud and that the investigation relates to delays in paying out redemptions.