Monday, 28 July 2014
Last updated 8 hours ago
Nov 9 2009 | 12:32pm ET
A court has reinstated one of Amaranth Advisors’ claims against JPMorgan Chase.
The collapsed hedge fund sued its clearing broker two years ago, accusing it of trying to force it into default. But a New York state court last year tossed Amaranth’s claim of tortuous interference, leaving just a breach of contract claim.
But an appeals court has restored the former allegation based on a statement allegedly made by two JPMorgan executives to Citadel Investment Group, which bought up two-thirds of its portfolio for pennies on the dollar. Steve Black and Bill Winters, the heads of JPMorgan’s investment bank, allegedly told Citadel founder Kenneth Griffin that Amaranth was “not as solvent as they are telling you they are,” and wouldn’t be able to find another taker for its poisonous portfolio, which had lost $6 billion on bad natural gas bets. Amaranth claims that $2.5 billion of those losses were the result of the cash concession it had to pay JPMorgan to take on its energy portfolio.
The ruling was not a complete victory for Amaranth: The hedge fund saw its breach of contract claim tossed by the appeals court, meaning it’s still got only one claim against JPMorgan. The collapsed hedge fund said it was “reviewing out options with regard to the dismissal of the breach claim.”
Amaranth claims that JPMorgan refused to execute a trade transferring its natural gas positions to Goldman Sachs so that it could take the portfolio for itself. The hedge fund is seeking $1 billion in damages.
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…