On 19th January 2015, following a three month trial, Ulf Magnus Michael Peterson was found guilty by a jury of eight counts of fraud, forgery, false accounting and fraudulent trading. Mr Peterson was the founding director of Weavering Capital (UK) Ltd and the former investment manager of the Weavering Macro Fund.
The SFO’s investigation focused mainly on a number of interest rate swap trades between the Weavering Macro Fund and another offshore company, Weavering Capital Fund Ltd, which Mr Peterson also owned and controlled.
Over the six years in which the fund operated, Mr 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 US$780 million 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 US$536m.