A Swedish fraudster operating in Kent has been convicted at Southwark Crown Court for misleading investors about the true value of his fund.

Ulf Magnus Michael Peterson, 51, was the founding director of Weavering Capital (UK) Ltd and the former investment manager of the Weavering Macro Fund. He was found guilty of eight counts of fraud, forgery, false accounting and fraudulent trading following a 3-month trial.

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

Over a 6-year period investors were misled into putting US$780 million into the Macro Fund, which was marketed as a liquid, 'low risk' fund primarily engaged in exchange trading. When investors began asking for their money back in December 2008 after the worldwide financial crisis struck, there were no real assets to fund any repayments. 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 US$536m.

Throughout the fund's existence, Peterson rewarded himself handsomely from investors' monies.

This is one of the first hedge fund prosecutions of its kind to arise out of the 2008 financial crisis. The Serious Fraud Office was the investigating body in the case, having received help from the City of London Police and the authorities in the British Virgin Islands, Cayman Islands, Germany, Luxemburg, the Republic of Ireland, South Africa, Sweden, and Switzerland. Sentencing will occur at Southwark Crown Court on 23 January.