Amaranth settles CFTC manipulation charges

Release: 5692-09
For Release: August 12, 2009

Amaranth Entities Ordered to Pay a $7.5 Million Civil Fine in CFTC Action Alleging Attempted Manipulation of Natural Gas Futures Prices

Amaranth Advisors, L.L.C. and Amaranth Advisors (Calgary) ULC settle CFTC charges of attempted manipulation of natural gas futures prices on the NYMEX

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it has entered into a consent order settling charges brought against Amaranth Advisors, L.L.C., based in Greenwich, Connecticut, and its Amaranth Advisors (Calgary) ULC subsidiary, based in Calgary, Alberta (the Amaranth entities) for attempting to manipulate the price of natural gas futures contracts on the New York Mercantile Exchange (NYMEX) on February 24 and April 26, 2006.

The federal court order, entered on August 12, 2009, by the Honorable Denny Chin of the U.S. District Court for the Southern District of New York, requires that the Amaranth entities pay a $7.5 million 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, L.L.C. from violating Section 9(a)(4) of the Commodity Exchange Act (CEA), which prohibits anyone from making false, fictitious, or fraudulent statements to registered entities, such as the NYMEX.

Consent Order Arises from CFTC Complaint Filed in July 2007

The consent order arises from a CFTC complaint filed on July 25, 2007. Commodity Futures Trading Commission v. Amaranth Advisors, L.L.C., et al., 07-cv-6682 (DC) (S.D.N.Y.). (See CFTC Press Release 5359-07, July 25, 2007.) The CFTC alleged that Amaranth attempted to manipulate the price of natural gas futures contracts traded on the NYMEX on February 24, 2006, and April 26, 2006. The complaint also alleged that in response to an inquiry from NYMEX about the April 26, 2006 trading, Amaranth Advisors L.L.C. made false statements to NYMEX, a CFTC-registered entity, to cover up defendants’ attempted manipulation. This conduct allegedly violated the CEA.

Simulaneously, the Federal Energy Regulatory Commission (FERC) 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 today’s settlement announcement.

The CFTC staff members responsible for this matter include: Michael C. McLaughlin, Elizabeth C. Brennan, David Oakland, R. Stephen Painter, Linda Y. Peng, Nathan Ploener, Karin N. Roth, W. Derek Shakabpa, David W. MacGregor, Manal Sultan, Lenel Hickson, Jr. and Vincent McGonagle.

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