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Hedge fund, former traders strike deal on alleged manipulation

Date: Wednesday, November 26, 2008
Author: Tara Perkins, Globe and Mail

Amaranth Advisors LLC and two of its former traders havestruck a settlement deal with U.S. regulatory staff over the alleged manipulation of natural gas futures prices.

The deal was submitted to the U.S. Federal Energy Regulatory Commission, according to Bloomberg News, and could end the long case against hedge fund traders Brian Hunter and Matthew Donohue.

A spokesman for Mr. Hunter, a Calgarian who made more than $100-million trading natural gas for Amaranth before the hedge fund collapsed, declined to comment.

The commission accused the traders last year of manipulating prices on the New York Mercantile Exchange, and proposed a $291-million (U.S.) fine.

In an interview at the time, the commission's chairman, Joseph Kelliher, told The Globe and Mail that Mr. Hunter fled the U.S. as Washington regulators had been trying to interview him.

“He was in the middle of an interview and there was a lunch break, and he never came back from lunch,” Mr. Kelliher had said.

A spokesman for Mr. Hunter had said he left the meeting after he became aware that the commission had misrepresented what it wanted to talk about.

The commission's original allegations were based on a year of inquiry into the $8-billion hedge fund and the problems that eventually brought it down.

Mr. Hunter had been hired in 2004 by Amaranth's chief executive officer, and in late 2005 the hedge fund allowed him to move his trading desk to his hometown of Calgary.

The settlement, if approved by the commission, will resolve all claims asserted against all respondents, Chief Administrative Law Judge Curtis Wagner wrote in a filing obtained by Bloomberg. An agency judge also must certify the settlement, Mr. Wagner wrote.

There is still a case pending against Mr. Hunter and Amaranth by the Commodity Futures Trading Commission.