DUFF & PHELPS LIQUIDATORS to the UK’s largest hedge-fund fraud have managed to win back $450m (£289.8m) following a civil challenge.
Geoffrey Bouchier and Paul Clark (pictured) of Duff & Phelps were appointed joint administrators to Weavering Capital (UK) Limited in March 2009. The administrators were then appointed liquidators in March 2010.
The case was heard by Mrs Justice Proudman in the High Court, who found in favour of the liquidators, represented by law firm Jones Day, awarding damages against four of the main defendants: founder Magnus Peterson, his wife Amanda Peterson, chief operating officer Charanpreet Dabhia and senior employee Edward Platt.
Weavering Capital was a London-based hedge fund management company. It was investment manager of Weavering Macro Fixed Income Fund Limited, a Cayman Islands hedge fund that collapsed in March 2009. The demise left investors, such as charities and pension funds, with losses of over $530m.
Duff & Phelps’ Bouchier said: “This judgment vindicates our work and actions taken since the collapse of Weavering Capital in March 2009 to recover misappropriated funds for the benefit of creditors and to bring those responsible for investor losses to account.
“We will now proceed to enforce the judgment and progress the recovery of other related assets for the benefit of creditors.”
Justice Proudman found in favour of all the liquidators’ arguments and said although Peterson “had an answer for everything … none of his explanations hold water”.
She also highlighted “misrepresentations” and “misleading statements” made by Peterson in the fund’s marketing materials, as well as other written and oral communications, which gave investors a “thoroughly misleading” impression on the fund’s investment strategy.
Proudman also noted in court that the Serious Fraud Office (SFO) abandoned its criminal case into Peterson’s fraud just a month before the civil trial began.
A statement from Duff & Phelps’ law firm Jones Day said that “a fraudster who has commmited fraud on such a grand scale … should not be allowed to escape with mere bankruptcy,” the Financial Times reports.
The publication also reports that the SFO could face a legal challenge if it does not reopen a criminal investigation. Former investors to Weavering are seeking a meeting with newly-appointed director David Green.
Peterson said in a statement highlighted by the publication that “the judgment is simply wrong”.
“Even if this is just a civil case, the judgment shows a very limited understanding of the financial and trading aspects of the management of the fund,” he said.
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The fast-track move is a bold departure from the norm, as a probe would normally only begin several months after administrators had finished their own enquiries