Saturday, 26 July 2014
Last updated 14 hours ago
Dec 19 2007 | 4:09pm 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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…