Fund manager Philip Richards first heard the alarm bells last December. The star of RAB Capital had taken a £50m speculative bet on Northern Rock a couple of months earlier and now that the ailing bank was teetering on the brink of collapse that decision was looking foolish.

His purchase a year earlier of Sheikh Maktoum Hasher Maktoum al-Maktoum's stake in A1 GP, a rival to Formula One motor racing, was also beginning to backfire, and Richards had taken the first write-down on his $150m (£85m) investment. It has since been written down to almost nothing.

In RAB Capital's boardroom, former chancellor Lord Lamont was leading calls for Richards to give up his role as chief executive. That finally happened two weeks ago.

Investors were losing faith in the former army captain for the first time in his stellar hedge-fund career, with many demanding their money back.

Continued at Times Online