U.S. Commodity Futures Trading Commission is charging Brian Hunter, former head energy trader at failed hedge fund Amaranth, with attempting to manipulate natural gas futures prices and says that Amaranth Advisors LLC lied to its regulator, the New York Mercantile Exchange (Nymex) in an attempted cover up.
“The defendants here put on major positions in a designated contract market during closing period to bang the close and attempt to benefit their swaps positions on the ICE platform. But it was unsuccessful,” said CFTC commissioner Michael Dunn in a press conference this morning.
The CFTC says that Hunter acquired more than 3,000 Nymex natural gas futures contracts just prior to the closing range and dumped them during the closing range to drive down the price while holding large short swaps positions on the ICE. The swaps potions are financially settled based on the NYMEX settlement price, and the CFTC says Hunter tried to drive down the Nymex prices to benefit his swaps positions. In addition, the CFTC says when questioned about trading on April 26, 2006, Amaranth Advisors LLC lied to the Nymex to cover up the attempted manipulation.
Hunter’s lawyer, Michael S. Kim of Kobre & Kim LLP said in a press statement that Hunter’s actions had no affect on the markets, and that the enforcement action is politically motivated attempt to “regain the public spotlight after learning of the intention of FERC [Federal Energy Regulatory Commission] to file an action against my client.”
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