Some of the world's wealthiest investors in hedge funds have come clean and admitted they put money into products stuck together by Bernard Madoff, the New York market maker-cum-asset manager arrested last week and charged with fraud.

It has emerged new client money coming into his hands was being used to generate returns to older investors. Madoff is alleged to have told his employees that losses from the pyramid scheme could run to $50bn (€36bn), and that his business had been insolvent for years.