An investigation into Ross Asset Management (RAM) and related entities began in November last year after investors complained about delayed or non-payment of funds.
Large portions of client portfolios shown as invested through a broker 'Bevis Marks' were actually fictitious and never existed, the SFO alleges.
It believes Ross overstated those investment positions by more than $380 million.
Simon McArley, acting chief executive of the SFO, said the allegations amounted to serious criminal matters.
"However the saddest fact of all of this is the position that Mr Ross' clients find themselves in," he said.
Just weeks before the FMA raided RAM in November last year, investors who met him were convinced their money was "as safe as houses".
After raiding RAM, the FMA obtained freezing orders of the Ross group's assets and those of associated entities.
Initial inquiries by receivers showed investments of only $10.2 million actually existed.
Ross could not be reached in the early days of the investigation due to his hospitalisation under the Mental Health Act.
Belinda Moffat, FMA head of enforcement, said the authority would now complete its investigation into conduct by Ross under the Financial Advisers Act.
"We will also shortly release best practice guidance for financial advisers providing discretionary investment management services to ensure our expectations are well understood by advisers, as well as guidance for investors considering using such services," she said.
