Frankfurt's public prosecutor has begun a criminal investigation into a senior employee of Phoenix Kapitaldienst GmbH, a German hedge fund manager, alleged to have siphoned €700m ($930m) from funds invested in by 29,000 to 30,000 retail investors.

Thomas Bechtel, a spokesman for the prosecutor, said: "We are standing at the beginning of a big process. The police have passed us a letter, written on March 10 by the executive officers of Phoenix Kapitaldienst GmbH, claiming one person has manipulated records over some years to get more than €700m. Now we have to decide what to do."