By Kirstin Ridley
LONDON (Reuters) - Britain's top fraud prosecutor is likely to face serious criticism over its handling of an investigation into the $600 million collapse of one of London's oldest hedge funds, a judge said on Tuesday.
Already smarting from a 300 million pound ($466 million) damages claim after a botched investigation into the Tchenguiz property moguls, the office is under pressure from politicians who say it has not done enough to bring bankers and other financial industry figures to book since the 2008 crisis.
Judge Alistair McCreath set a provisional date for the criminal trial of Magnus Peterson, the founder of Weavering Capital, for October 2014 and a provisional date for an abuse of process hearing for November 8.
He said the office was likely to face "quite serious criticism" in the trial.
The SFO in 2011 suspended its 2-1/2 year investigation into Weavering before a civil case awarded $450 million in damages against Peterson and three other directors. The Office later reopened the investigation under new SFO director David Green.
"The SFO's decision in 2011 will be subject to scrutiny," said one lawyer not involved in the criminal proceedings, who blames Green's predecessor Richard Alderman for the "bizarre" move.
An SFO spokeswoman said she could no longer confirm the exact details surrounding the 2011 decision to drop Weavering, as its website had been updated since it re-opened the case.
Investors lost hundreds of millions of dollars when Weavering collapsed in the wake of the credit crisis in 2009. The SFO arrested two fraud suspects in May 2009, but later said it lacked the evidence to secure a conviction.
The decision to re-investigate Weavering marked a major u-turn under Green, who last April joined a demoralized and under-funded agency that narrowly avoided being rolled into a new FBI-style body by Home (Interior) Secretary Theresa May in 2011.
Green has also launched a criminal investigation into alleged rigging of global benchmark interest rates, known as Libor, following a political furor in the wake of a 290 million pound Barclays <BARC.L> regulatory fine last year.
Weavering imploded in 2009 after it was discovered that the key assets of its main fund, Weavering Macro, were huge interest rate swap transactions with another offshore entity also controlled by Peterson.
Peterson has maintained his innocence throughout. "It's been years," he told Reuters as he left the court. "It's been a shambles."
($1 = 0.6439 British pounds)
(Editing by Patrick Graham)