Weavering hedge fund fraud case reopened in London

The criminal investigation surrounding the demise of Weavering Capital, London’s largest ever hedge fund collapse, is being reopened by the UK Serious Fraud Office on the heels of a High Court judgement found founder Magnus Peterson liable for deceit and in breach of his fiduciary duty.

The SFO dropped a previous fraud case last September after deciding there was insufficient hope of conviction of senior executives at the $639m hedge fund.

The directors of the Weavering Macro Fixed Income fund announced in March 2009 they were suspending redemptions due in part to “a related-party transaction in the form of a large interest rate swap position of a material amount where the counterparty is a company controlled by a related party of Weavering.”

The swap agreements, valued at about $637m, caused Weavering’s collapse, and SFO to launch an investigation into Peterson, as well as relatives who peopled the board of the fund.

That investigation also collapsed, but has been resurrected by the SFO’s new director David Green.

The SFO’s examination comes on the heels of a High Court finding in a civil case brought against Peterson that he had breached his fiduciary duty and was liable for deceit.

Peterson called the judgement “simply wrong [and it shows] a very limited understanding of the financial and trading aspects of the management of the fund”.





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