The force said the investigation centers on three firms - Business Consulting International, John Anderson Consulting and Kenneth Peacock Consulting - that have allegedly mishandled millions in investors' money.
All three had their operations frozen by the Financial Services Authority (FSA) in 2008 and following a referral from the regulator, police raided three addresses in London and Surrey yesterday (May 21st).
Officers arrested a 40-year-old man on suspicion of conspiracy to defraud, money laundering and fraud by misrepresentation.
A 43-year-old man was arrested later also on suspicion of conspiracy to defraud, money laundering and fraud by misrepresentation.
The FSA has also issued proceedings against three people linked to the consultancy firms for allegedly taking unlawful deposits and operating an unauthorized collective investment scheme.
Detective inspector David Manley of City of London Police said: "We are working in partnership with the FSA to tackle this complex investment fraud that involves hundreds of victims and losses suspected to run into tens of millions of pounds."
The Press Association reports that both men arrested yesterday have since been bailed.