Amaranth, Hunter Respond to FERC Charges

Date: Thursday, December 20, 2007
Author: Finalternatives.com

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."