Ulf Magnus Michael Peterson, who was the founding director of Weavering Capital and former investment manager of the Weavering Macro Fund, was found guilty at Southwark Crown Court of eight counts of fraud, forgery, false accounting and fraudulent trading following a three month trial.
The SFO’s investigation focused on a number of interest rate swap trades between the Weavering Macro Fund and another offshore company, Weavering Capital Fund Ltd, which Peterson also owned and controlled.
Over the six years in which the fund operated, Peterson used the swap trades to inflate artificially the Macro Fund’s investment performance, and thereby mislead investors as to its true value. The reported value of the fund grew increasingly to depend on the bad debt generated by the swap trades with the related counterparty to the point that when it collapsed in March 2009, its entire net worth was based on those valueless swaps.
Over a six year period investors were misled into putting $780m (€670m, £515m) into the Macro Fund, which was marketed as a low risk and liquid fund primarily engaged in exchange trading.
When investors began asking for their money back in December 2008 following the worldwide financial crisis, there were no real assets to fund any repayments. Unable to pay back investors, the Macro Fund ceased trading on the Irish Stock Exchange in March 2009 and liquidators were appointed. The net losses to the investors were approximately $536m.
The SFO said throughout the fund’s existence, Peterson rewarded himself “handsomely” from investors’ monies, to the value of £5.8m between 2005 and 2009.
It added: “While 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.”
Director of the SFO, David Green CB QC said: “I would like to thank all those who assisted us with this highly complex international investigation, including investors, auditors, liquidators, the Irish Stock Exchange, City of London Police and overseas law enforcement authorities, without whose assistance we could not have built this challenging case.”
Peterson is to be sentenced at Southwark Crown Court on 23 January 2015 and has been remanded in custody.