Amaranth Gets Claim Back, Loses Another, In JPMorgan Appeal

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.


In Depth

MiFID2 For U.S. Firms: Key Questions Answered

Feb 27 2017 | 4:54pm ET

The January 2018 deadline for implementation of the EU’s mammoth MiFID2 regulations...

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