Serious Fraud Office reopening probe into Weavering Capital

THE Serious Fraud Office (SFO) has reopened its criminal investigation into the collapse of Weavering Capital in 2009 – 10 months after dropping the original probe.

New director David Green called for the U-turn after a high court judge found Weavering Capital’s founder Magnus Peterson liable for deceit and breach of his fiduciary duties in a civil case in May.

Weavering Capital, one of London’s oldest hedge funds, went into administration in March 2009.

Last September the SFO dropped its investigation into the case, saying it did not have “a reasonable prospect of conviction”. However liquidators of Weavering, represented by law firm Jones Day, successfully launched a civil case against Peterson and other Weavering staff.

The SFO announced its change of heart on its company website, citing the court judgment.

“The company was advisor to a Cayman Islands incorporated hedge fund called Weavering Macro Fixed Income Fund Ltd which had funds of $639m [£413m] under management in 2008,” said the SFO release. “The investigation concerns interest rate swap transactions between the fund and a related Weavering company in the British Virgin Islands which had the effect of inflating the net asset value of the fund.”

It is not the first volte-face for Green, who took the helm at the SFO in April. His predecessor, Richard Alderman, backed out of a criminal investigation of Libor manipulation because of lack of resources but Green secured an extra £3m of Treasury funding to carry it out.