Bernard Madoff, the Wall Street trader allegedly responsible for a $50 billion (£32.3 billion) fraud, will be electronically tagged and placed under house arrest at his Manhattan apartment after failing to find enough people to secure his bail.

Mr Madoff appeared at the federal courthouse in Manhattan this afternoon to complete paperwork for his bail under the strict conditions.

He refused to speak to reporters as he left the courthouse, wearing a baseball cap and a black jacket.

Mr Madoff must wear an electronic tag and will not be allowed out of his apartment between 7pm and 9am as part of the bail conditions. Judge Gabriel Gorenstein also ruled that Mr Madoff and his wife, Ruth, must surrender their passports to the court.

The dramatic twist in what may be the biggest fraud perpetrated by an individual emerged after Mr Madoff failed to find four signatories to guarantee a $10 million bond imposed by a New York court last week.

Mrs Madoff put up one of the couple's many homes, their Manhattan apartment, as security but, because the property is worth $7 million, Mr Madoff needed to secure signatures from four "financially responsible" people to meet the required $10 million bail.

Mrs Madoff and Mr Madoff's brother, Peter, had signed as part of the bail conditions but the trader was unable to find two additional signatories to guarantee the remaining $3 million, prompting the judge to place the alleged fraudster under house arrest.

Last night, Christopher Cox, chairman of the Securities and Exchange Commission (SEC), admitted that repeated tip-offs to the regulator about Mr Madoff's activities were never followed up.

Mr Madoff registered his business, Bernard L. Madoff Investment Securities, with the regulator in 2006, but the SEC has said it never completed an examination of the firm.

Usually, it completes investigations into companies within a year of their registration.

There is further humiliation for the SEC because Mr Madoff once served on one of its advisory committees. In 2000, he was invited to join a panel advising on stock market trading rules.

It also emerged that the SEC has launched a probe into the relationship between one of its former officials and a niece of Mr Madoff, the Wall Street Journal reported.

Shana Madoff, a niece of Mr Madoff who works as a compliance lawyer at the family's firm, married Eric Swanson, a former SEC attorney, last year.

The SEC is currently investigating whether the relationship had any impact on its oversight of Mr Madoff's company.

One of Mr Swanson's duties before he left the SEC in 2006 had been to supervise the regulator's inspection programme charged with trading oversight at stock exchanges and electronic trading platforms.

Last night, a spokesman for Mr Swanson said: "The compliance team he helped supervise made an inquiry about Bernard Madoff's securities operation".

He also said that Mr Swanson and Ms Madoff started a relationship in 2006 and were married the following year.

Another spokesman said the relationship began "years after" the investigation, and said Mr Swanson would "cooperate fully" with the SEC, the Wall Street Journal reported.

Neither Mr Swanson nor Ms Madoff have been named by the SEC as targets of the probe, but the Journal reported that David Kotz, the SEC inspector general who is leading the investigation, said he intended to examine the relationship.

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