The collapse of one of London’s oldest hedge funds, Weavering Capital in 2009, is once again to be examined by the SFO under its new director David Green.
The re-investigation of Weavering Capital, especially looking at the events prior to the $600m collapse, comes as a net result of the Libor crisis which has been in the media spotlight recently.
Weavering imploded relatively early on in the financial downturn, in 2009. The Wearvering fraud hinged on a series of swaps trades that the flagship Weavering fund, Weavering Macro, entered into with a related counterparty, controlled by Weavering’s founder, Magnus Peterson.
Green, SFO’s director, is looking into Weavering again as he said he would undertake a criminal probe into potential rigging of the Libor rate.
Mr Green was able to secure an extra £3m from the Treasury, as cross-party calls in the Houses of Parliament to facilitate the Libor probe on the grounds that bankers found to be manipulating the rate should face criminal charges.
Green, since assuming the directorship has endeavored to undertake a thorough case reviews of all files at the SFO. This has been despite operating on a £32m budget which, compared with £52m in 2008, has found the SFO increasingly cash-strapped according to varying reports.
The previous director of the SFO, Richard Alderman, was unable to do a full criminal investigation of Libor manipulations due to limited resources and not wishing follow the same investigative lines of the Financial Services Authority and Office of Fair Trading.
On 29th May 2012, Mrs Justice Proudman of the UK’s High Court found Magnus Peterson, his wife Amanda and two colleagues Chas Dabbia and Edward Platt, as liable for the breach of fiduciary duties.
The decision to reopen the criminal probe has been well received by Weavering’s investors who were reportedly indignant, along with others in the hedge fund industry, when the SFO was forced to drop its criminal probe last September.