The boss of collapsed UK hedge fund Weavering could be jailed for up to 10 years after being found guilty of fraud by a London court yesterday, giving the Serious Fraud Office (SFO) one of its most senior financial scalps since the credit crunch.
Magnus Peterson (51) was found guilty of eight counts of fraud, forgery, false accounting and fraudulent trading after a 12-week trial that tested the jury's grasp of financial markets. The fraud over a six-year period cost investors $536m ($460m). Mr Peterson has been remanded in custody and will be sentenced on January 23, the SFO said in a statement.
Swedish-born Peterson, a charismatic former interest rate and foreign exchange trader, pitched his flagship fund to institutions and wealthy individuals as a low-risk investment offering stable returns.
But he was found guilty of covering up rising trading losses by weaving a web of deception that unravelled in March 2009, six months after the bankruptcy of Wall Street's Lehman Brothers sent panic through global markets and prompted investors to clamour for redemptions. Mr Weavering could not pay up.
The SFO, which investigated trades between the Weavering Macro Fund and Weavering Capital Fund, an offshore company owned by Peterson, said the fund manager artificially inflated his fund's investment performance and misled investors to put $780m into the Macro Fund over a six-year period.
"Whilst Mr Peterson knew full well what the true value of the fund was when it collapsed, his investors did not. To them, the extensive losses they suffered came as a complete shock," the SFO said in the statement.
Peterson paid himself £5.8m between 2005 and 2009, the statement said. Peterson named Weavering after a village in Kent, England, near where he lived at the time. According to the SFO, he told investors he followed a low-risk strategy and invested in exchange-traded futures and options. After the fund lost money, Peterson sought to hide the losses with interest-rate swaps.