Meanwhile, analysts were already arguing that the alleged fraud and its impact would or should shock the hedge fund industry into adopting more transparent business practices.

"This situation stems from the lack of information and evidence that investors are provided with. For too long it’s been an unwritten industry rule that senior management will leave individual managers alone to ply their trade without answering to any higher power and without needing to provide disclosure.  As a result, some hedge fund investors have had to resort to ridiculous methods such as employing detectives or investigators to try and establish what is going on – this surely cannot be right," said Rick di Mascio, chief executive and founder of research firm Inalytics.

Statements were issued by firms yesterday about Madoff, including:

HSBC - the UK-listed bank, which operates a large private banking aarm, confirmed media reports speculating that it had exposure to Madoff. The bank said its potential exposure was "in the region of $1 billion". The bank said it also has custody clients who had invested with Madoff, but HSBC said it did not believe these arrangements would be a source of exposure for the bank.

Fortis Bank Nederland - the bank said it and its subsidiaries had no direct exposure to Madoff but parts of the group do have a risk exposure to certain funds the bank provides collateralised lending to. The loss could amount to around €850 million, it said.

KBC – the Belgian bancassurer, which is the ultimate owner of UK private bank Brown Shipley, said it had “no direct exposure to” Madoff Investment Securities. Meanwhile, KBC said its “indirect exposure” via collateralised loans to funds of funds was “immaterial to KBC’s earnings.

“KBC has made some loan advances to institutional customers who have invested in funds managed by Madoff Investment Securities, but does not expect this to have any indirect material impact, either,” it said.

Crédit Agricole, the French bank, said its overall exposure to Madoff’s investment business was below €10 million.

Union Bancaire Privée said the exposure of its clients to Madoff “represents less than 1 per cent of the total assets under management of the bank”.

In a statement, UBP added: “The bank’s financial robustness is of the highest order: not only does the bank have a Tier 1 ratio of 16 per cent in terms of shareholder equity, which is twice the minimum legal requirement of 8 per cent, but it has also had a constant balance-sheet structure over several years and no investments at risk.”

Hennessee Group, the US-based hedge fund firm which also regularly issues data on performance by the hedge fund sector, said it had no exposure to Mr Madoff's funds.

Raymond James - the financial advisory network said it had not, as it said had been erroneously reported by the CNBC television news channel, marketed Madoff products and had otherwise no exposure to these investments.

Yesterday, media reports named institutions as having some exposure to Madoff including Nomura, BNP Paribas, UBS, Pioneer Investments, BBVA and Bramdean Alternatives.

Tremont Group Holdings Inc, a hedge- fund firm owned by OppenheimerFunds Inc, had $3.3 billion, or more than half its total assets, invested with  Mr Madoff's funds, Bloomberg reported, citing a person familiar with the matter.

Tremont’s Rye Investment Management unit had $3.1 billion, virtually all the money the group managed, allocated to Madoff, said the person.

 Man Group, the UK-listed hedge fund firm, said in a statement, that it had $360 million of exposure.