Hedge fund managers of WG Trading Company, Westridge Capital Management, North Hills Management LLC and Westgate Capital Management LLC have been arrested in the US yesterday and charged with securities fraud.

James Nicholson, 42, founder of Westgate Capital Management LLC, was arrested and criminally charged with securities fraud and bank fraud in causing losses of as much as $100m since 2004, prosecutors and the FBI said.

"In December 2008 numerous investors in funds controlled by Westgate Capital began seeking to redeem their investments," according to a statement by the U.S. Attorney in Manhattan and the FBI.

The agencies said nearly two dozen investors received checks collectively totaling nearly $5m, but all of those checks were returned for insufficient funds. Other investors have unsuccessfully sought to redeem funds of more than $10m.

In a separate civil complaint, the Securities and Exchange Commission said it was seeking a court order to freeze the assets of Mr. Nicholson and the firm, based in Pearl River, N.Y., which was not registered with the regulator.

Mr. Nicholson "sought to further his fraud by creating a fictitious accounting firm and providing some investors with bogus audited financial statements" the SEC said.

In a separate case Paul Greenwood, 61, and Stephen Walsh, 64, managing general partners of WG Trading Co., were charged by federal prosecutors with conspiracy, securities fraud and wire fraud.

The two are accused of using client money as "their personal piggy-bank" to fund lavish lifestyles, according to the Securities and Exchange Commission.

The SEC and the Commodity Futures Trading Commission brought civil charges against the men, WG Trading and an affiliated firm, investment adviser Westridge Capital Management Inc. of Santa Barbara, Calif.

The authorities contend the scheme began in 1996 and operated through this month, according to authorities. Of the $660m that clients invested, Messrs. Greenwood and Walsh misused as much as $550m, according to the SEC.

The SEC said the men solicited numerous institutional investors, including educational institutions and public pension and retirement plans, by promising to invest their money in an "enhanced equity index" strategy. Instead of investing the money as promised, they stole investor funds for their personal use, the commission said.

Another person, former WG Trading employee Mark Bloom, was arrested on Wednesday and charged separately in U.S. District Court in Manhattan with fraud related to his activities at his North Hills Management LLC financial firm in New York.