SFO abandons two-year inquiry into failed fund

The Serious Fraud Office has been forced to ditch a two-year investigation into the collapse of the Mayfair hedge fund Weavering Capital, after conceding it was unlikely to secure a criminal conviction.

The agency arrested its founder Magnus Peterson and senior employee Edward Platt in a dawn raid shortly after Weavering's principal fund went into liquidation in March 2009. It dropped the case this week saying there "wasn't reasonable evidence for prosecution".

Geoffrey Bouchier of MCR, the firm liquidating Weavering, said the decision was "deeply disappointing". It came after a Cayman Islands court ordered Mr Peterson's brother and stepfather to pay damages of $111m (£69m) for wilful neglect of their duties as directors of the fund.

Weavering's collapse left investors nursing losses of more than $500m and they have vowed to fight on to secure a criminal prosecution.