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

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR