The founder of a $580m Mayfair hedge fund firm that imploded amid a flurry of fraud allegations in 2009 has been charged with six offences including false trading, false accounting and forgery.
The charges brought by the Serious Fraud Office follow a three-and-a-half-year investigation into the complex investment activities of Maidstone-based Swedish banker Magnus Peterson on behalf of clients of the firm, Weavering Capital.
The hedge fund, which had assets under management of $583m, had appeared to be performing well until a rush of investors sought to pull out in the wake of the banking crisis at the end of 2008 and irregularities came to light. By March 2009 administrators were called in and investors said they had lost more than $530m.
In civil proceedings earlier this year 49-year-old Peterson, representing himself, denied wrongdoing, insisted that he had made no personal gain, and suggested that another Weavering employee had acted fraudulently. Legal representatives for Peterson, who has a background in banking in Sweden and London, could not be reached for comment.
Delivering her judgment in civil proceedings, Mrs Justice Proudman found in favour of liquidators from Duff & Phelps, ruling that certain swap trades "were indeed shams". Damages of $450m were awarded against Peterson and three others. She said: "It is my view that these swaps were never intended to be enforceable instruments but were simply used to manipulate the NAV [net asset value] figures to give the impression to investors that (Weavering's) Macro (fund) was successful."
The claimants had alleged that rather than entering into swaps with major banks as its trading counterparties, investor funds had been used to make $637m of swap trades with an investment vehicle, incorporated in the British Virgin Islands, that was mostly owned and controlled by Peterson. These were not arm's-length deals, they claimed.
According to PriceWaterhouseCoopers accountants, who were asked to assess the worth of Peterson's investment vehicle, it included interests in a failed stage musical as well as an investment in a music video company. After the assessment the Macro fund was put into liquidation.
SFO investigations into Peterson had initially appeared to make little progress and in September last year the agency's director Richard Alderman closed the inquiry, concluding that there was "no reasonable prospect of conviction".
That decision was reversed by Alderman's successor, David Green QC, in July, in one of his first moves after taking charge. Weavering creditors had threatened to launch a judicial review of the SFO's decision to drop a criminal inquiry.
guardian.co.uk © Guardian News and Media Limited 2010