LONDON (AP) -- Royal Bank of Scotland Group PLC and hedge fund Man Group PLC said Monday they could lose hundreds of millions of pounds as a result of exposure to hedge funds managed by arrested Wall Street investment manager Bernard Madoff.

As it was revealed that Madoff's fraudulent activity stretched across Europe as well as the United States, RBS reported it could lose around 400 million pounds ($600 million) while Man Group said it had invested around $360 million.

Well-regarded asset manager Bramdean Alternatives has already said it had 9 percent of its funds invested with Madoff's funds, prompting manager Nicola Horlick to lash out Monday at U.S. regulators for failing to detect the fraud earlier.

Madoff is accused of running a $50 billion Ponzi scheme to defraud investors.

"I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they haven fallen down in the job," Horlick told the British Broadcasting Corp. "This is the biggest financial scandal, probably in the history of the markets -- $50 billion is a huge amount of money."

RBS -- one of Britain's largest banks, which is now 58 percent owned by the British government -- said it had exposure through trading and collateralized lending to funds of hedge funds invested with Bernard L Madoff Investment Securities LLC.

"If as a result of the alleged fraud the value of the assets of these hedge funds is nil, RBS's potential loss could amount to approximately 400 million pounds," it said in a statement to the London Stock Exchange.

Man Group, the world's largest publicly traded hedge fund manager, said its exposure was through RMF, its predominantly institutional fund of funds.

RMF has approximately $360 million invested in two funds that are directly or indirectly sub-advised by Madoff Securities and for which Madoff Securities acts as broker/dealer executing the investment strategy.

"RMF will continue to monitor and evaluate the situation on behalf of its investors and will take appropriate steps to seek recovery of investor assets," it said in a statement.

It added that RMF's flagship fund, even allowing for zero valuation of its allocation to Madoff advised assets, "remains materially ahead of industry benchmarks."

Man Group said the overall exposure represents approximately 1.5 percent of RMF's funds under management, and 0.5 percent of funds under management for Man Group as a whole.

Bramdean Alternatives said that even if forced to write off its entire investment in Madoff's scheme, it would still only be down 4 percent on the year while the stock market had fallen 35 percent.