Liquidators win in $600m fraud case against hedgie
MAGNUS Peterson, the boss of collapsed hedge fund business Weavering, has been found guilty of defrauding investors and ordered to pay hundreds of millions of dollars in damages.
London’s High Court ruled that Peterson, manager of the Weavering Macro Fixed Income fund, deceived clients and breached his duty of care to investors with a strategy that could not cope with the vagaries of markets at the height of the global credit crisis.
Damages of $450m were awarded against Peterson and three other directors including his wife, Amanda.
The outcome comes a day after the Financial Services Authority doled out a record fine to Italian academic-turned-fund manager Alberto Micalizzi.
“I do not accept Mr Peterson’s assertions that the investors understood his strategy very well. He cannot show any document in which he explained it,” Judge Sonia Proudman wrote in her judgment.
The Serious Fraud Office (SFO) dropped probes into both Micalizzi and Peterson in recent years, raising questions over London’s ability to uncover and punish white collar crime. The SFO claimed that there was not “a reasonable prospect of conviction” in the Weavering case and quit its investigation into Micalizzi citing a lack of evidence.
Proudman said that Peterson, who represented himself throughout the case, may have committed the fraud “out of a sense of invincibility, self-belief, and a gambler’s mentality”.
Three other directors at the fund firm — Edward Platt, Charanpreet Dabhia and Amanda Peterson — were also found guilty of negligently permitting fraud to happen.
Joint liquidators of Weavering, Geoffrey Bouchier and Paul Clark, launched a civil case against Peterson and other Weavering staff last year after the SFO dropped its probe into the 2009 collapse. They were represented by law firm Jones Day.
Throughout the case Peterson denied lying to investors.
The case centred on more than $600m of interest rate swap agreements between the Macro fund and a British Virgin Islands company called Weavering Capital Fund, which was related to Weavering.