SFO moves in on failed hedge fund Weavering Macro

By BEN LAURANCE FOR MAILONLINE
Updated:

The Serious Fraud Office is poised to move in on the investigation of a hedge fund that collapsed this week.

Accountants PricewaterhouseCoopers (PwC) have been appointed liquidators of Weavering Macro Fixed Income Fund, which is based in the Cayman Isles but run from London.

PwC was called in when it emerged that the fund's apparent value was based on a series of contracts with an offshore company linked to Weavering's chief executive.

It now appears that this company does not have the money to pay out what it owes.

The SFO said yesterday it had asked to meet PwC to find out more about the collapse.

Investors with Weavering face losses of hundreds of millions of pounds.

Weavering Capital, the London-based firm that runs the collapsed fund, has been put into administration. It is authorised by the Financial Services Authority and its senior managers have FSA approval.

Investors have been trying to take money out of Weavering funds since November, but have been able to retrieve only a fraction of their cash.

Investigation: Weavering Macro Fixed Income Fund is based in the Cayman Isles

Investigation: Weavering Macro Fixed Income Fund is based in the Cayman Isles


The fixed income fund was recently valued at nearly £350million. But that depended almost entirely on interest rate swaps involving £440million - and these had been struck with another company that was controlled by Magnus Peterson, Weavering's founder.

This company did not have the money to honour its bargains, and it is understood that the firm's directors include relatives of Peterson, who founded Weavering in 1998.

Weavering announced ten days ago that it was suspending redemptions after suspicions emerged.

Investors have asked to withdraw investments of £136million, but they are unlikely to see much of their money back, according to Matthew Wilde, head of PwC's hedge fund restructuring team.

A spokesman for the FSA said it refuses on comment on individual cases.

However, it is expected to launch an inquiry into what has gone wrong at Weavering.

The watchdog does not regulate hedge funds as such, as they are usually held offshore. But it has responsibility for fund managers based in the UK.

Peterson was former head of trading at Swedish bank SEB.

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