Citigroup has identified seven of the investors who have allegedly fallen victim to an act of fraud committed by a Hong Kong-based financial advisor, a report in the Wall Street Journal reveals.

Ramesh Sadhwani, who was part of Citigroup's Smith Barney brokerage team, has been accused of paying returns to investors from funds held in other clients' accounts, instead of from actual investment gains - an activity very much similar to a Ponzi scheme. Following a probe by hired consultant PricewaterhouseCoopers, the bank estimated the losses to be around $1.7 million.

Mr Sadhwani has denied the allegations and said that he simply "did not leave at the best of times," the news service wrote. Citigroup reportedly terminated his employment early this year and he now works as an analyst for an online brokerage firm called Angel Broking. Mr Sadhwani had around 200 client accounts, which collectively held around $30 million.

According to the publication, Citigroup had offered to compensate part of the losses incurred by some investors, but one investor, Urvashi Gidwani, declined and called the offer "unacceptable." Another investor, Shankerlal Sureka, had also blamed the bank for not having detected the fraud and is asking to be compensated for all losses, plus the returns promised by Mr Sadhwani.

Citigroup has, so far, remained firm in its position that it is not liable for the clients' losses, the publication added.

The majority of the investors affected are from the Indian community based in Hong Kong.