Shares of Patisserie Holdings, owned in part by British restaurant entrepreneur Luke Johnson, have been suspended since Wednesday, when the company disclosed a shortfall between reported financial numbers and the current state of the books.
The company's press release said the firm had been informed that Mr. Marsh "was arrested by the police last night and has been released on bail", adding that further updates would be released as developments unfolded.
Last May he said that Patisserie Valerie had "a strong balance sheet" so the problems will come as a major disappointment to him.
The company also plans to raise as much as £15 million through the issue of new shares.
This morning a statement to the stock market from Patisserie Holdings, the chain's owner, said: "The company has been made aware that Chris Marsh, who is now suspended from his role as company finance director, was arrested by the police last night and has been released on bail".More news: Trump pessimistic about Khashoggi's fate, says 'not looking too good'
Hertfordshire Police confirmed that a 44-year-old man was arrested on suspicion of fraud by false representation and released under investigation yesterday evening.
The company, with professional advisers from accountants PwC, spent 24 hours investigating the financial status of the company.
Historical statements on the cash position of the company were misstated and subject to fraudulent activity and accounting irregularities, directors said.
British entrepreneur Luke Johnson owns 37 percent of the high street chain's holdings and is now unable to provide the capital requested.
"We can give no further information or comment at this time", the SFO said without naming the individual.More news: British royal newlyweds release official wedding photos
It is understood that the company has failed to pay rents.
This significantly affected the company's cash position, with the firm saying it could lead to a "material change" in its overall financial position.
Two Patisserie Valerie branches in London were closed on Friday, while the chain's parent company teetered on the brink of collapse.
As well as grappling with a potentially fraudulent multimillion-pound accounting black hole, Patisserie Holdings has been slapped with a winding up petition over £1.14 million in unpaid taxes to HMRC.
Patisserie Holdings - which owns additional brands like Druckers, Philpotts, Baker & Spice - trades from more than 200 stores, including three in the north and also has a partnership with Sainsbury's, with branded counters present in the supermarket.More news: Saudi stocks dive 7.0 percent, wiping out 2018 gains