Amaranth Fires Back At CFTC Charges

Jul 26 2007 | 2:00pm ET

Amaranth Advisors founder Nicholas Maounis offered a vigorous defense of his soon-to-be-defunct firm against market manipulation and cover-up charges.

Maounis, who is in the process of shuttering the Greenwich, Conn.-based firm after it lost some $6 billion on bad natural gas bets last year, told Amaranth investors in a letter yesterday that the firm is innocent of the Commodity Futures Trading Commission charges, filed yesterday in New York federal court.

“The simple fact is that Amaranth did not attempt to manipulate the natural gas futures market or any other market, nor did Amaranth make any false statements to the NYMEX, the CFTC or any other regulator,” Maounis wrote. “The allegations made by the CFTC today, while certain to attract extensive media attention, lack any basis in the evidence of the law.”

Moreover, Maounis wrote, “Even if the CFTC’s allegations were true—which they are not—the net impact on Amaranth of this trading—taking into account both futures and swaps trading—would have been a loss [emphasis in original] of approximately $1.1 million.” Beside, he said, Gregory Mocek, the CFTC’s enforcement director, said that Amaranth’s alleged attempts to manipulate the markets were “unsuccessful.”

Maounis said he was “disappointed” that the CFTC filed the charges in spite of what he called Amaranth’s having “cooperated fully and voluntarily” in its probe.

“It is worth noting the allegations that the CFTC chose not to make,” Maounis said, before enumerating them in eight bullet points, including that the regulator did not allege “excessive speculation” or present a “smoking gun.”

While Maounis did not address Federal Energy Regulatory Commission charges, filed today, he said, “Amaranth agrees” with his former trader, and fellow defendant, Brian Hunter’s charge that the regulator has overstepped its authority.

“Amaranth never traded physical natural gas,” he wrote. “The notion that our NYMEX futures trading manipulated or attempted to manipulate prices in the physical natural gas market that FERC oversees is disingenuous and wrong.”

MAOUNIS' LETTER TO AMARANTH INVESTORS

THE LAWSUITS:

FERC's order to show cause
CFTC enforcement action

RELATED STORIES:

Hunter Sued By FERC, Pledges To Fight CFTC Charges
Amaranth, Hunter Hit With Market Manipulation Charges

Amaranth Hits Back At Pension Adversary
Amaranth Hit For Naked Shorts


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of