German authorities are seeking to examine all accounts of a little-known brokerage firm in Frankfurt that may have misstated assets by as much as €800 million ($1.1 billion) in case that could possibly turn into one of the biggest-ever fraud cases in Europe involving an investment fund.

Markets regulator Bafin together with prosecutors in Frankfurt and an insolvency administrator are seeking to determine the actual sum of money that may be missing from Phoenix Kapitaldienst GmbH. The firm, with about 30,000 investors from Germany and Scandinavian countries, proposed a product that tried to change trends in financial markets upon the usage of derivatives contracts.

"We are investigating Phoenix for fraud and breach of fiduciary duty spanning a number of years," said Thomas Bechtel, a spokesman for the Frankfurt prosecutor’s office in an interview with the Wakk Street Journal. He added the investigation is focused on "one particular individual," a Phoenix employee now collaborating with authorities, but may broaden and involve other individuals. Up to the present moment no arrests have been made.

Managers at Phoenix disclosed the potential fraud within the past week after finding out that a certain trading account purported to contain about €600 million didn’t exist. Then they addressed Bafin, which last Thursday blocked the company’s accounts. Prosecutors also began an investigation, and on Monday they appointed an insolvency administrator to manage Phoenix. The administrator said in a statement that the firm declared to have total assets of €800 million. But it still remains unclear how much of that really exists or ever did.
Representatives from Phoenix could not be reached to comment.