Amaranth Advisors LLC, a hedge fund based in Greenwich, CT used to control as much as half the natural gas market in the United States. The fund collapsed in 2006 after losing over $6.5 billion on natural gas contracts that once numbered as many as 100,000 in a single month. That collapse was in no small part the doing of Brian Hunter who settled on Tuesday.
Amaranth Advisors: Late day manipulation
Hunter was sued by the Commodity Futures Trading Commission in 2007, when they posited that Hunter tried to manipulate the price of natural gas futures contracts by placing large sell orders as the contracts were expiring on the New York Mercantile Exchange. The suit claimed that Hunter did this in both February and April of 2006 in an effort to lower the prices of the contracts held elsewhere.
For its part, namely the employment of Hunter, Amaranth LLC agreed to pay $7.5 million to end cases brought by the Federal Energy Regulatory Commission and the CFTC over price manipulation in 2009. That, however, was a gift given its settlement of a class-action suit by traders that the company settled for $77.1 million in 2012.
U.S. District Judge Ronnie Abrams in Manhattan federal court approved the settlement on Tuesday in the case marked CFTC v. Hunter, 07-cv-6682.
Without admitting nor denying the allegations pressed by the CFTC, Mr. Hunter agreed to a consent order that will keep him from making the same plays in the future. Mr. Hunter will (forever) be barred from trading natural gas futures or related financial instruments during the daily closing period for those contracts. Additionally, he was barred permanently from trading during the settlement period of any product regulated by the CFTC.
With Tuesday’s settlement, Hunter will avoid standing trial in a case that was scheduled to be hear in early October. The agreement “fully resolves” the CFTC’s claims against Mr. Hunter.
Last year, the Federal Energy Regulatory Commission attempted to fine Mr. Hunter $30 million for his manipulative practices but that was thrown out by a U.S. appeals court after it determined that the FERC lacked the authority to fine the trader.
Andrew Lourie, a lawyer for Hunter, declined to comment after he was contacted by various news sources following the settlement on Tuesday.