Regulation  

Hedge fund manager jailed for 13 years

Hedge fund manager jailed for 13 years

The former head of the collapsed hedge fund Weavering Macro Fixed Income Fund Ltd has been sentenced to a total of 13 years in prison, having been found guilty of eight counts of fraud, forgery, false accounting and fraudulent trading earlier this week.

Magnus Peterson, 51, of Kent, was convicted on Monday (19 January) following a three-month trial.

Over a six-year period, investors were misled into putting $780m into the Macro Fund, which was marketed as a low risk and liquid fund primarily engaged in exchange trading.

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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 $536m.

Throughout the fund’s existence, Mr Peterson rewarded himself “handsomely” from investors’ monies, to the value of £5.8m between 2005 and 2009.

This is one of the first hedge fund prosecutions of its kind to arise out of the 2008 financial crisis, the Serious Fraud Office said.

He was sentenced at Southwark Crown Court today (23 January) by Mr Justice Smith, who said: “You knew the risks that cheating entailed for investors …It was entirely foreseeable that investors would lose huge amounts.

“Sophisticated dishonesty on this scale calls for the maximum sentence possible.”

Jane de Lozey, SFO’s joint head of fraud, said: “The length of sentence handed down reflects the damaging and extended nature of Mr Peterson’s crime.

“The loss to investors was vast and was compounded by the defendant’s continued deception as to the true health of their investments. That the SFO pursued this case demonstrates its determination to prosecute the top-most tier of complex economic crime. “

A decision on director disqualification is to be scheduled to a later hearing.

donia.o’loughlin@ft.com