The Luxembourg Fund Industry Association, or ALFI, named only three of the funds whose losses have been made public: LuxAlpha, Luxinvest and Herald (Lux).

Luxalpha board member Rene-Thierry Magon de la Villehuchet committed suicide last month when he lost $1.4 billion (euro1 billion) that he had invested with Madoff. Both Luxalpha and Luxinvest were promoted by Swiss bank UBS. HSBC and clients of Austria's Medici bank placed money with Herald.

In the U.S., hedge fund assets fell by $100 billion (euro77 billion) in October alone as investors withdrew their money and funds were forced to sell stock, exacerbating the severe volatility that pounded global markets during the month. Some funds have reacted by banning any more withdrawals.

France's government has pointed fingers at Luxembourg as the home of funds that lost money for many French investors. In an indirect attack last week, it called on EU regulators to check if all countries properly applied investor protection rules.

Luxembourg Prime Minister Jean-Claude Juncker shrugged off that allegation on Monday, saying France and Luxembourg had the same investor protection rules and the European Commission had never found problems with any EU nation on that issue.

Luxembourg's banking secrecy and low taxes attract investors and many billions of euros (dollars) — often irritating larger neighbors France and Germany.

ALFI said in a statement it would back any EU measure to improve supervision of the sector. "Even if the Madoff scandal is unprecedented by the proportions of the fraud and its international consequences, we should draw all the lessons to avoid such situations from happening again."

ALFI said the main blame for the scandal lay in the United States but checks should also be made to see if European advisers had taken enough care before telling clients to invest with Madoff.

It said the 16 funds affected by the fraud were a small proportion of the 12,300 active in the country and the money at risk was only 0.15 percent of the money managed by Luxembourg funds.