Amaranth Hits Back At Pension Adversary

Jun 18 2007 | 12:44pm ET

A California pension fund knew what it was getting into, and has no one to blame but itself for losing much of its investment with Amaranth Advisors, the going-out-of-business hedge fund says.

In seeking the dismissal of a lawsuit filed by the San Diego County Employees Retirement Association—remarkably, the only suit filed against the Greenwich, Conn.-based firm over its $6 billion in natural-gas trading losses last year—Amaranth said its disclosure documents made clear the risks involved. The agreement the association signed explicitly stated, “The fund is a speculative investment that involves risk, including the risk of losing all or substantially all of the amount invested.”

SDCERA has invested $175 million with Amaranth in 2005. It has since recouped some $73 million, but filed suit against the firm in March anyway, seeking $150 million plus damages.

In its motion, filed in federal court in New York, Amaranth portrays SDCERA’s move as sour grapes.

“Simply put,” the motion says, “SDCERA took a known risk and lost money. It now seeks to recover both its initial investment, and unrealized profits earned through the speculation that this lawsuit decries.”

The pension, of course, sees it differently, arguing that Amaranth, which at its peek managed $9 billion, indicated that it invested in at least six different sectors and had sophisticated risk-management systems in place.

“Just because they gave us lengthy disclosure statements, it doesn’t give them a license to steal,” SDCERA CEO Brian White told the San Diego Business Journal.

Amaranth and its founder, Nicholas Maounis, have warned that SDCERA’s lawsuit will both delay its plan to return its remaining assets to investors, as well as deplete what’s left. Making good on that promise, the firm has hired a pair of high-profile law firms, Winston & Strawn and Boies, Schiller & Flexner, to defend itself.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.