* Weavering liquidators bring High Court case against
* Peterson denies lying to investors about fund's
investments in swaps
* Peterson said to have massively written up BVI fund's
By Laurence Fletcher
LONDON, Nov 1 The manager of Weavering Macro
fund, the hedge fund whose credit crisis collapse left investors
with hundreds of millions of dollars of losses, lied to clients
and massively wrote up the value of assets, a court heard.
The liquidators of Weavering's UK operation began a civil
case in London's High Court last month for fraud and breach of
duty against Magnus Peterson, Weavering's chief executive and
manager of its Macro fund, and other employees.
The case centres on more than $600 million of interest rate
swap agreements between the Macro fund and a British Virgin
Islands company called Weavering Capital Fund (WCF), which was
related to Weavering.
The liquidators say WCF was controlled by Peterson and used
to hide hundreds of millions of dollars in trading losses from
investors -- a claim that Peterson denies, saying that the swaps
were part of a hedging strategy.
Robert Anderson QC, representing the liquidators, alleges
that Peterson "continually and royally misled" investors by
concealing the fund's investment in the swaps.
"Investors pick up that there are interest rate swaps in the
(fund's) accounts, they're then sent more up-to-date financial
information, which doesn't show any interest rate swaps, and
when they ask where the swaps have gone, you lie to them and
tell them they are all closed out," he said on Tuesday.
Anderson said that in response to one investor request for a
breakdown of the Macro fund's positions in early 2009, Peterson
had said the fund had 80 percent of assets in exchange-traded
securities and 20 percent in over-the-counter securities.
"This was manifestly untrue," said Anderson, who said the
swaps at that point accounted for more than 100 percent of the
Macro fund's assets.
Peterson, who denies lying to investors, said he gave a
"very, very rough gross asset exposure," adding "this whole
trial is a reflection of how differently we all look at
He also said that by telling investors the positions were
closed out he had meant that they were fully hedged, not that
the fund did not hold the positions.
Anderson also says WCF made a number of investments at the
end of 2008, around the time that Lehman collapsed, to "try to
bolster the balance sheet ... in case anybody ever started
asking questions" about WCF's ability to honour its swap
agreements with the Macro fund.
Anderson said Peterson valued an investment of 50 pounds in
a music and video technology company called MVM Limited at
"That seems rather optimistic, because ... the last set of
audited accounts for MVM were to 31 May 2008, which showed ...
it had liabilities of 100,000 pounds," Anderson said.
Anderson said Peterson valued an 810,000 pound investment in
a company called Lobo Gris at $4.47 million. The firm was owned
by one of Peterson's friends and was going to make a documentary
about Adolf Hitler if he had survived World War II, but went
into administration 18 months ago, Anderson said.
Peterson said MVM had "gone very far in discussions with
Nokia of putting (its) technology into their phones", while Lobo
Gris "was looked upon then as something that could be extremely
"All of the investments we see were ... forecast to be
phenomenally profitable, although ended up making no money
whatsoever," Anderson said.
Last week Anderson told the court that Peterson had
"manipulated" the fund's performance from 2003 -- a claim
The case comes a little over a month after the SFO dropped
its two-and-a-half-year probe, saying there wasn't "a reasonable
prospect of conviction".
The High Court case continues.