Magnus Peterson of Weavering Capital: FCA delivers the coup de grace

Chris Hamblin

28 October 2015

As the head of scandal-struck Weavering Capital, Peterson was sentenced to 13 years' imprisonment in January for furnishing false information relating to accounts; trading with intent to defraud a creditor; obtaining a money transfer by deception; two counts of making a false instrument; fraud by abuse of position; dishonestly making a false representation to make gain for self/another or cause loss to other/expose other to risk; and carrying on the business of a company with intent to defraud creditors or for other fraudulent purpose.

Over the six years in which the Weavering Marco Fund operated, Peterson used swap trades to 'inflate' its investment performance and thereby mislead investors about its true value. The reported value of the fund grew increasingly to depend on the bad debt generated by swap trades with a related counterparty to the point that, when it collapsed in March 2009, its entire net worth was based on those valueless swaps.

Peterson had been approved by the Financial Conduct Authority's predecessor, the Financial Services Authority, to perform the controlled functions of:

(between 1 December 2001 and 3 May 2012) CF1 (Director), CF3 (Chief Executive);
(between 1 December 2001 and 31 October 2007) CF8 (Apportionment and Oversight); and CF27 (Investment Management);
(between 23 November 2005 and 15 November 2007) CF10 (Compliance Oversight);
(between 23 November 2005 and 15 December 2005) CF11 (Money Laundering Reporting); and
(between 1 November 2007 and 3 May 2012) CF30 (Customer).

Section 56(1) Financial Services and Markets Act allows the regulator to make a prohibition order if it thinks that someone is not 'fit and proper' to be an 'authorised person.'