Amaranth Lawsuit Against JPMorgan Tossed

Aug 8 2011 | 12:33pm ET

Nearly five years after its spectacular collapse, Amaranth Advisors has seen its lawsuit against JPMorgan Chase join it in the dustbin of history.

A New York State judge dismissed the 2007 claim against the investment bank, in which Amaranth accused JPMorgan of sabotaging and thwarting its desperate effort to save itself as it lost $6 billion on the natural gas market. Amaranth claims that nearly half of those losses were the result of JPMorgan's actions, first in refusing to transfer its natural gas trades to Goldman Sachs and then by undermining a deal with Citadel Investment Group. The hedge fund claims that JPMorgan did so in an effort to profit from Amaranth's dire straits—which it did, eventually taking on the portfolio alongside Citadel and turning a $725 million profit.

But Judge O. Peter Sherwood ruled that Amaranth can't actually show that JPMorgan executives Steve Black and Bill Winters' warning to Citadel that "Amaranth is not as solvent as they are telling you" was the reason Citadel backed out of the deal.

Instead, Citadel "conducted its own research in connection with the proposed transaction with the fund and evidence of the tenuousness of the fund's financial condition was readily available," Sherwood wrote.

Amaranth said it would appeal the ruling—as it has done with past adverse rulings. In 2008, another judge dismissed five of Amaranth's six claims against JPMorgan, and a year later a New York appeals court dismissed the one remaining claim while reinstating another.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note