New York (HedgeCo.Net) – After a long and drawn out trial regarding the collapse of the UK’s largest hedge fund, Weavering, which went down in 2009 with more than $530m of losses, founder Magnus Peterson has been sentenced to 13 years in prison.

The sentence has been hailed as a success for collaboration between the UK state prosecutors and private investors around the world which gave assistance and evidence.

“This is an example of private-public co-operation.” A source at The Financial Times said, “There is no way we’d be at this point were it not for the resolve of the investors, who threw money back in the pot to pursue Mr Peterson in civil proceedings. In these complex fraud cases, unless the investors commit to the process, commit to giving evidence, and do some of the hard forensic investigation, it’s much less likely that they’ll get to trial.”

Among the charges were that the fund manager “deceived clients with a strategy that could not cope with the vagaries of markets at the height of the global credit crisis.”

Peterson has consistently maintained his innocence and denied lying to investors. In the judgement Justice Proudman ruled “I do not accept Mr Peterson’s assertions that the investors understood his strategy very well. He cannot show any document in which he explained it. In all the circumstances it is my view that these swaps were never intended to be enforceable instruments.”

Other directors at the firm were found guilty of negligently permitting fraud to happen.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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