Amaranth fined USD7.5m for attempted manipulation of gas futures prices

Date: Friday, August 14, 2009
Author: Hedgeweek.com

The US Commodity Futures Trading Commission has entered into a consent order settling charges brought against Amaranth Advisors, based in Greenwich, Connecticut, and its Calgary subsidiary for attempting to manipulate the price of natural gas futures contracts on the New York Mercantile Exchange on 24 February and 26 April 2006.

The federal court order, entered on 12 August 2009, by the Honorable Denny Chin of the US District Court for the Southern District of New York, requires that the Amaranth entities pay a USD7.5m civil monetary penalty.

Additionally, the court's order permanently enjoins the Amaranth entities from violating the anti-manipulation provisions of the Commodity Exchange Act. The order also prohibits Amaranth Advisors from violating Section 9(a)(4) of the Commodity Exchange Act, which prohibits anyone from making false, fictitious, or fraudulent statements to registered entities, such as the Nymex.

The consent order arises from a CFTC complaint filed on 25 July 2007. The CFTC alleged that Amaranth attempted to manipulate the price of natural gas futures contracts traded on the Nymex on 24 February 2006 and 26 April 2006. The complaint also alleged that in response to an inquiry from Nymex about the 26 April trading, Amaranth Advisors made false statements to Nymex, a CFTC-registered entity, to cover up defendants' attempted manipulation. This conduct allegedly violated the CEA.

Simultaneously, the Federal Energy Regulatory Commission announced a settlement with certain Amaranth defendants.

The claims in the CFTC complaint against Brian Hunter, the head natural gas trader for the Amaranth entities, are not affected by the settlement announcement.