The new director of the Serious Fraud Office (SFO) has performed a U-turn by reopening a major fraud investigation dropped by his predecessor last year.
David Green quietly ordered his organisation to reopen its inquiry into the $600m (£387m) Weavering hedge fund, which collapsed in what was the biggest-ever fraud in the sector.
The decision was taken on Friday, hours after Mr Green announced he would be pursuing a criminal investigation into the Libor-fixing scandal, but news of the decision emerged yesterday due to the SFO's decision not to announce it formally.
Mr Green's predecessor, Richard Alderman, controversially axed the investigation into the London-based fund in September last year citing lack of evidence.
The decision enraged victims of the fraud, who, just a month later, began a successful civil action against Weavering's founder, Magnus Peterson, and others including his wife, Amanda, winning an award of $450m. Peterson was found liable for deceit and breach of fiduciary duties by the High Court.
Some in the legal world were bemused that the Serious Fraud Office should shut its investigation before viewing the evidence and judgment of that civil case. It argued that there was insufficient evidence to secure a conviction.
Weavering's creditors threatened a possible legal challenge to the decision and had been in discussions with Mr Green, left, in recent weeks.
The Serious Fraud Office said the move had been taken following a review of the civil case's findings.
Mrs Justice Proudman gave a damning judgment of the numerous "misrepresentations" and "misleading statements" by Peterson, who had "consistently wrongly valued" the fund's assets and forged documents.
Weavering collapsed in March 2009 after the discovery that its flagship fund's main assets were a swaps trade with an offshore company controlled by Peterson. It was these swaps which Mrs Justice Proudman described as having been consistently overvalued.
Peterson argued that the civil case judgment was "simply wrong".
There remains questions about the funding for the SFO, which has had its budget slashed as it opens investigations such as the Libor inquiry.