SFO drops investigation into two more Kaupthing suspects The decision to release Armann Thorvaldsson, former head of Kaupthing's UK investment banking business, and the bank's ex-treasurer, Gudni Adalsteinsson, from police bail comes just weeks after the SFO dropped a parallel investigation into entrepreneur Vincent Tchenguiz. It marks a further serious blow to what was the SFO's most high-profile investigation. The SFO refused to name the two individuals but did confirm it was dropping the investigation. Two men previously arrested and released on police bail in the SFO Kaupthing investigation are no longer suspects and police bail is to be cancelled. The setback comes as the SFO is waiting on the outcome of a judicial review into the arrest of Mr Tchenguiz and his brother Robert. A High Court hearing into the search warrants and arrests of the Tchenguiz brothers threw up a catalogue of errors leading the presiding judge Justice Thomas to brand the SFO incompetent. At that hearing, the new director of the SFO David Green promised to undertake an urgent review of the case against Vincent Tchenguiz. The review resulted in the investigation against him being dropped. Mr Tchenguiz is understood to be preparing legal action against the SFO for damage to his business caused by the arrests. He has already sent the SFO legal warnings that he could mount a £100m suit against the agency. It is understood he is also preparing legal action against other parties involved in the investigation against him. It is thought Mr Thorvaldsson and Mr Adalsteinsson could mount similar challenges. From being one of the SFO's most high profile cases the Kaupthing investigation has turned into one of its most problematic. Of the seven men arrested in March last year, the SFO has now had to formally drop its investigation into three of them. The number could rise to four once the judicial review into the arrest of Robert Tchenguiz is published.