Amaranth, Hunter Respond To FERC Charges

Dec 19 2007 | 5:09pm ET

Five months after being sued by the Federal Energy Regulatory Commission for market manipulation, collapsed hedge fund Amaranth Advisors and two former traders are firing back.

Echoing founder Nicholas Maounis’ response to FERC’s July action, in a Friday filing Amaranth challenged the agency’s jurisdiction in the case. The hedge fund also complained that FERC’s action, which seeks $200 million in fines for Amaranth, is “particularly unfair,” piling on a firm that’s already been forced out of business.

Hunter, in his own filings, denied any wrongdoing. “There is no evidence or even allegation that Amaranth’s trades were in any way fictitious or deceptive,” Hunter’s memorandum charges. “They did not involve wash sales, matched orders, rigged prices or some other deceptive conduct. The market was not deceived as to who was buying or selling the futures, how many futures were actually traded or at what price. Hunter did not inject false information into the marketplace or fail to disclose any information he was obligated to disclose. He did not violate any New York Mercantile Exchange rule by selling futures during the closing range.”

What’s more, “Hunter’s trades did not actually cause any material effect on the market price of natural gas futures, and hence had no effect on the NYMEX settlement price. That fact not only disproves the Commission’s claim; it negates the Commission’s statutory jurisdiction.”

FERC is seeking $30 million in fines against Hunter, accusing him of illegally trying to manipulate the settlement price of the NYMEX natural gas futures contract on three occasions last year, prior to Amaranth’s collapse. The agency included several instant message conversations involving Hunter, including one with fellow respondent and former Amaranth trader Matthew Donohoe in which Hunter wrote, “today came together quite nicely.” Donohoe, against whom FERC has proposed a $2 million fine, said the allegations against him are based on “communications that never occurred or in which he never participated.”

Amaranth and Hunter are also being sued by the Commodity Futures Trading Commission.

RELATED STORIES:

Hunter Says Solengo On The Brink, Blames Regulator
Out To Lunch: Hunter Skipped Town During FERC Probe
Amaranth Fires Back At CFTC Charges
Hunter Sued By FERC, Pledges To Fight CFTC Charges

Amaranth, Hunter Hit With Market Manipulation Charges


In Depth

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...