One of the key investigators working on the Bernard Madoff suspected fraud scheme said yesterday that it would take six months to unravel his "utterly unreliable" financial records.

Stephen Harbeck, the president of the Securities Investor Protection Corporation (SIPC), which can pay insurance to American investors to cover up to $500,000 of their losses, said in a television interview on Bloomberg yesterday: "There are some assets but I have no idea what the relationships of the assets available are to the claims against them. The records are utterly unreliable on this case."

His warning came as Christopher Dodd, the chairman of the Senate Banking Committee, demanded information from America's main financial regulator, the Securities and Exchange Commission, over how it had failed to detect what has been described as the world's biggest fraud scheme.

As Democrat chairman of the committee, Mr Dodd has the power to subpoena key officials from the SEC, including the chairman, Christopher Cox. In such an event, they would be forced to answer questions in public testimonies to account for their behaviour. Mr Cox is in his final days of office given that new US presidents appoint their own SEC chairman.

While Mr Madoff did not register as an investment adviser until 2006, since then his investment advisory business has never been the subject of an SEC examination. Some regulators have speculated that Mr Madoff may have run a second investment advisory business that was never registered with regulators. However, the scandal remains painfully embarrassing to the SEC because Mr Madoff once served on one of its advisory committees.

As hostility grew against the SEC and its failure to detect the alleged fraud, a scheduled court hearing at which Mr Madoff was expected to fulfil final conditions of his bail agreement was adjourned until 2pm today.

Mr Madoff, who was released on $10 million bail at the end of last week, is scheduled to return to the 500 Pearl Street court house in downtown Manhattan to complete court papers today. It is believed he is staying at his smart Upper East Side apartment.

Last Wednesday, Mr Madoff confessed to his two sons, Mark and Andrew, who worked for Bernard Madoff Investment Securities, that he was "finished", that his business was "all just one big lie" and that it was "a giant Ponzi scheme".

According to the US Attorney Southern District of New York office, which charged Mr Madoff with securities fraud on Thursday, he also told his sons that he estimated the losses incurred at one of his businesses to have reached $50 billion. Mr Madoff said that he had planned to disburse his remaining $200 million to $300 million to certain employees, friends and relatives and then turn himself in. Over the past few years, the 70-year-old built up a business where he told clients, who had to invest a minimum of $1 million, that he was buying blue chip stocks and hedging against losses with options contracts.

The regulators believe that Mr Madoff did not make any investments on his clients' behalf but took cash from new customers to pay the 12 per cent returns he had promised existing clients. Such a scheme is only sustainable so long as there are sufficent new clients entering the scheme. It is believed that Mr Madoff's sons approached regulators before their father had time to change his mind.

On Monday evening, a US judge liquidated the investment business and Mark and Andrew issued a statement through their lawyer insisting that they were victims of the scheme rather than perpetrators. As Wall Street began examining the investment strategies that Mr Madoff had told clients he pursued, experts warned that it should have been obvious to regulators that his claims were false.

Nick Day, the co-founder of the fraud investigation firm Diligence, based in London and New York, said he believed that it was unfeasible for Mr Madoff to have acted alone. "Many fund investors are sophisticated and require checks and balances such as a dual sign-off on transactions. It is not possible for him to have acted alone."