Private Fund Directors: Don’t Just Sit There – Do Something!

Article by Peter Astleford, George Mazin and Peter McKeown-Walley*

If you don't want to pay up, do your best, even if it is your incompetent best. That is one message from Mr. Justice Andrew Jones, QC in the recent Cayman Islands Grand Court decision in Weavering Macro Fixed Income Fund Limited v. Stefan Peterson and Hans Ekstrom¹ ("Weavering") where the two defendants, both "independent" directors of the Weavering Macro Fixed Income Fund (the "Fund"), were each ordered to pay damages in the amount of US$111 million for wilful neglect or default in carrying out their duties.

The case arose out of the liquidation of the Fund following the discovery that Magnus Peterson, the promoter and principal investment manager, had been fabricating interest rate swaps as investments to inflate the net asset value of the Fund and hide the fact that the Fund was making losses. The messages from this case, however, are generally applicable to all private fund directors and,