The probe by Bafin follows sharp criticism over the transparency of the country's capital markets after a vertiginous surge in VW's share price triggered by the weekend disclosure by Porsche that it had a much larger interest in its fellow carmaker than many traders had realised.

Shares in VW retraced some of those gains yesterday, tumbling 45 per cent to €517 after Porsche promised to settle options over up to 5 per cent of the carmaker's shares. This was aimed at avoiding “further market distortions” that could threaten the survival of some hedge funds.

Bafin said it had started a formal investigation for possible market manipulation, which could lead to criminal sanctions of up to five years in jail or a fine of up to €1m. It has not identified any targets.