Weavering founder Magnus Peterson jailed for 13 years for fraud

The founder of one of London's oldest hedge funds who perpetrated a $537m fraud has been sentenced to 13 years in prison, one of the toughest punishments handed out for a high-profile fraud in the UK in recent times.

Mr Justice Smith passed judgment on Magnus Peterson, 51, at Southwark Crown Court on Friday after a jury found the Swedish-born financier guilty of eight counts of fraud, forgery and furnishing false information on Monday. Mr Peterson, founder of Weavering Capital, had been in custody at HM Prison Wandsworth since the jury returned its verdict; one of the first for a manager of a hedge fund that imploded during the financial crisis.

Matthew Frankland, his solicitor, said: "Mr Peterson will inevitably be distressed at the length of the overall sentence and we are instructed to consider and advise upon any possible appeal."

While sentencing is always case and fact-specific, the 13-year stretch is higher than expected by legal experts and longer than other headline-grabbing financial-crime cases: Kweku Adoboli, the former UBS trader that racked up $2.3bn of losses through unauthorised trades, was sentenced to seven years in 2012; while Asil Nadir, the fugitive and founder of the Polly Peck empire, received 10 years for his £29m theft.

"The sentence is certainly at the top end of what might have been expected, but it does bring home the fact that white-collar crime is not regarded by the courts as soft or impactless crime," said Stephen Parkinson, a partner at Kingsley Napley. "In appropriate case courts will recognise the devastating impact that white collar crime can have on people's lives."

Mr Peterson was prosecuted by the UK's Serious Fraud Office and was originally charged with 16 counts. One count of furnishing false information was subsequently struck out during trial leaving 15 to be tried by the jury.

Weavering, which had its headquarters in London's Mayfair, imploded in March 2009 after it was discovered that the main assets of its flagship exchange traded macro fund were $637m in swaps trades with an offshore company also controlled by Mr Peterson, called Weavering Capital Fund.

The SFO accused Mr Peterson of using the swaps trades to artificially inflate the value of the macro fund, misleading investors.

The jury heard that when the macro fund - marketed to investors as low-risk, low-return - started to lose money from the very earliest days of its inception in 2003, Mr Peterson started to trade secretly through "pretend transactions" with WCF, and failed to inform investors or the macro fund's directors; "robbing Peter to pay Paul", as Amanda Pinto QC for the SFO described it in court.

Mr Peterson's conviction and heavy sentencing is a pre-election boon to the cash-strapped SFO, whose future has once again been made uncertain after the revival of plans to roll it into a wider crime-fighting agency.

The result is also a vindication to the SFO's director, David Green, who reopened the case after his predecessor closed it in 2011, citing the unlikelihood of a conviction.

In the interim, a civil court awarded $450m in damages against Mr Peterson, his wife and two other directors of Weavering's investment management company after creditors launched a London lawsuit. Armed with that decision in 2012, they urged the SFO to reopen the case - or face judicial review.

Tom Epps, a partner at Brown Rudnick, the law firm, said: "This matter can be seen as part of a series of SFO investigations focusing on the conduct of the financial services sector around the time of the financial crisis and we expect that area to remain one of the SFO's priorities through 2015."

Two such SFO cases - into the alleged rigging of Libor, the key interbank benchmark rate; and Barclays' dealings with Qatar during an emergency cash-call in 2008 - have received special government funding for their investigation.

The SFO has charged 13 people with Libor fixing-related offences, one of whom has pleaded guilty but has yet to be sentenced. The first jury trial in the world emanating from the Libor-rigging scandal is expected to begin in May, which involves a defendant in a separate alleged conspiracy.

The SFO is yet to make a charging decision in the Barclays matter.

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