The Wall Street Journal reported on Thursday that top former Merrill Lynch executives, including two former chief executives, invested in hedge funds that lost money with Bernard Madoff, becoming the highest-level Wall Street victims of the scandal to date.

Former chief executives Daniel Tully and David Komansky and former investment-banking chief Barry Friedberg personally invested in the funds, set up by former Merrill brokerage chief John Steffens, the paper said, citing people familiar with the matter.

Mr. Steffens' exposure to the scheme was tied to Ezra Merkin, a top Madoff investor who was one of three partners in Spring Mountain Capital LP, which managed nine of Mr. Steffens' hedge funds, the Journal said.

Spring Mountain invested in three Merkin-led funds, and Mr. Steffens was aware of their heavy Madoff exposure in one, it reported.

"The Madoff connection is sad," the Journal quoted Mr. Tully as saying. He said he invested with Mr. Steffens because "you back people you know and trust."