Wednesday, 23 July 2014
Last updated 11 hours ago
Jan 25 2010 | 9:18am ET
The trader that brought down hedge fund Amaranth Advisor tried to manipulate the natural gas market, an administrative law judge has ruled.
Brian Hunter, whose bad bets on natural gas cost Amaranth more than $6 billion in just a week in August 2006, leading to the demise of the firm a month later, intended to manipulate the price of natural gas futures contracts on the New York Mercantile Exchange in the first half of 2006, Judge Carmen Cintron ruled. The judge called Hunter’s explanations of his actions not credible.
Cintron’s ruling now moves on to the full Federal Energy Regulatory Commission, which brought the attempted market manipulation charges in 2007. A final ruling could come in about two months, although that’s not likely to be the end of the story.
Hunter’s trading “was specifically designed to lower the NYMEX price in order to benefit his swap positions on other exchanges,” Cintron wrote.
Hunter’s lawyer, Matthew Menchel, promised to appeal FERC’s decision.
“The FERC should never have presided over this matter which is outside its competence and jurisdiction,” Menchel said. “Its decision means nothing in our view, and the FERC will have to accept the consequences when we get to the D.C. Circuit, which the FERC has been trying to avoid for the last few years.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…