Weavering Macro Fixed Income Fund Limited
Weavering Macro Fixed Income Fund Limited v. Ernst & Young Ltd. et al:
Writ of Summons
Writ of Summons in Weavering Macro Fixed Income Fund Limited (in Official Liquidation) v. Ernst & Young Chartered Accountants (a firm), domiciled in Ireland; Ernst & Young Ltd., and Ernst & Young (a firm), both domiciled in the Cayman Islands, at the Grand Court of the Cayman Islands.
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Hedge Fund Investigation Reopened By Serious Fraud Office (SFO) – Weavering Capital
Serious Fraud Office (SFO) has reopened its investigation into collapsed hedge fund Weavering Capital, just weeks after damages of $700 million were awarded against the fund’s manager in a civil case in the High Court.
Britain’s Serious Fraud Office (SFO) has reopened its investigation into collapsed hedge fund Weavering Capital, just weeks after damages of $450 million were awarded against the fund’s manager in a civil case in the High Court.
The decision marks a U-turn by the fraud agency after it ended a 2-1/2 year probe into Weavering last September, saying there was no reasonable prospect of conviction.
Investors were left with hundreds of millions of dollars of losses when the Weavering Macro hedge fund collapsed during the credit crisis. The fund was found to have more than $600 million in interest rate swaps where the counterparty was a firm related to Weavering.
In May this year damages of $450 million were awarded against Weavering Macro’s manager Magnus Peterson, after a High Court case brought by the liquidators of Weavering’s British operation.
Judge Sonia Proudman ruled that the interest rate swaps on which the case centred were a “sham” used to manipulate net asset value figures to give investors the impression the Macro fund was successful.
“The (SFO’s) director, following a review of the High Court Civil Judgment by Mrs Justice Proudman on the 31 May 2012, has reopened a criminal investigation into Weavering Capital UK,” the SFO said in a short statement on its website.
The move is another major decision by SFO Director David Green, who took over from Richard Alderman in April and who told Reuters last month the SFO has to “prove itself”.
Last week the SFO said it would investigate the manipulation of interbank lending rates and last month it dropped its probe of property tycoon Vincent Tchenguiz.
The decision last September to end the investigation into Weavering, which raised questions over London’s ability to uncover and punish white-collar crime, came just days after a Cayman Islands court awarded damages of $111 million against two of the fund’s directors.
During its investigation the SFO made two arrests in May 2009, including Peterson.
“The decision of the SFO to re-open the investigation is welcomed by Weavering’s investors. They and the professional advisers involved in the case will provide every assistance to the SFO,” said Jones Day partner Barnaby Stueck, who represented the liquidators in the civil case.
For more on this story go to:
http://www.hedgeho.com/hedge-fund-news/hedge-fund-investigation-reopened-by-serious-fraud-office-sfo-weavering-capital/
$600m Scham Swaps – UK Hedge Fund Directors of Weavering in Breach of Duties – $450 million in damages
The UK’s High Court has found Magnus Peterson, Weavering’s founder; his wife Amanda; and two colleagues, Chas Dabhia and Edward Platt, jointly and severally liable for breach of fiduciary duties – awarding $450m in damages against them.
The liquidators of Weavering launched a civil case against Peterson and other Weavering staff last year after the UK’s Serious Fraud Office dropped its probe into the 2009 collapse.
The case centred on more than $600 million of interest rate swap agreements between the Weavering’s Macro fund and a British Virgin Islands company called Weavering Capital Fund (WCF), which was related to Weavering. In addition Weavering also inflated the NAV of various investments including a £50 investment MVM Limited, a music and video technology company which Peterson valued at $37.25 million, and an £810,000 investment in a firm called Lobo Gris valued at $4.47 million. Lobo Gris was owned by one of Peterson’s friends and was going to make a documentary about Adolf Hitler if he had survived World War II, but went into administration in 2010.
Throughout the case Peterson denied lying to investors. However, Madam Justice Proudman did not agree and 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.”
The court concluded that the swaps were never intended to be enforceable instruments but were a “sham” used to manipulate net asset value (NAV) figures to give investors the impression that the Macro Fund was successful. WCF had made a number of investments at the end of 2008 to try and bolster its balance sheet in case questions were raised about its ability to honour swap agreements it entered into with the Macro fund.
Mrs 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.
Mrs Justice Proudman concluded that WFC had no possibility of meeting its liabilities. The swaps with WCF enabled Mr Peterson to present steady, consistent and ultimately bogus returns to investors – and, perhaps more controversially, to Weavering’s third-party auditors, administrators and brokers.
Three other directors at the fund firm – Edward Platt, Charanpreet Dabhia and Amanda Peterson – were also found guilty of negligently permitting fraud to happen.
Mr Peterson maintains he is innocent. “The judgment is simply wrong,” he said in a statement on Wednesday. “Even if this is just a civil case, the judgment shows a very limited understanding of the financial and trading aspects of the management of the fund. This, which is the central part of the case, has just been glossed over.”
Jones Day partner Barnaby Stueck, who represented the liquidators, said in a statement after the judgment that Weavering’s investors believed Peterson should not be allowed to escape with mere bankruptcy. ”They will be asking the Serious Fraud Office to reconsider its decision not to proceed with the criminal investigation given these very clear findings,” he said.
It remains to be seen if legal action will now be sought against Ernst & Young, Weavering’s auditor.
For more on this story go to:
In the Matter of The Weavering Macro Fixed Income Fund Limited (in Liquidation): Transfer Order
Order transferring a case styled as ‘In the Matter of The Weavering Macro Fixed Income Fund Limited (in Liquidation)’ to the Financial Services Division of the Grand Court of the Cayman Islands.
For more on this story go to:
http://www.offshorealert.com/GetDocument.aspx?id=41460
