SFO criticised for dropping probe into collapse of Weavering Capital

THE SERIOUS FRAUD OFFICE has come under fire for its decision to close the investigation into the collapse of hedge fund Weavering Capital after conceding there was not a “reasonable prospect of conviction”.

The SFO launched the investigation into the collapse of the hedge fund manager, run by Magnus Peterson, in early 2009 after its principal Cayman Islands hedge fund, the Weavering Macro Fixed Income Fund, purported to have assets under management of over $530m (£334.8m) but went into liquidation in March 2009 leaving its investors, including charities and pension funds, with losses of over $500m.

Lawyers from the fund’s liquidators, Jones Day, criticised the SFO and said its decision was “deeply disappointing to Weavering’s investors and creditors” and “raises serious questions about ability and will of British prosecuting authorities to bring criminal charges in substantial fraud.”

“The SFO’s decision is particularly surprising given the weight of evidence, the proximity of the civil trial and the fact that, in related proceedings, a Cayman Islands judge has already found that Mr Peterson defrauded Weavering’s investors,” said Jones Day partner Barnaby Stueck.

On 26 August 2011, in a judgment in related proceedings, a Cayman Islands court found Peterson’s brother and stepfather liable for wilful neglect of their duties as directors of the Macro Fund and awarded damages against them of $111m.