Remember when losing a $6 billion was a big deal?
A few years ago, the collapse of Amaranth Advisors LLC was a very big deal. These days it seems postively small-fry. (Although the role of JP Morgan in the deal foreshadowed the role of the giant bank in making collateral calls on both Bear Stearns and Lehman Brothers.)
Well, at least one of the lawsuits stemming from the collapse of Amaranth has been settled. Bloomberg reports that Amaranth filed a settlement with staff of the Federal Energy Regulatory Commission over alleged manipulation of natural-gas futures prices. The terms remain secret.
Amaranth was accused by the commission in July 2007 of manipulating prices on the New York Mercantile Exchange. Both top trader Brian Hunter and the firm itself disputed whether FERC really had jurisdiction to bring a case based on futures trading.
An earlier settlement for $291 million, reached in November 2008, was rejected by the commission. The new settlement will also have to be approved by the commission.
Hunter himself wasn’t included in the settlement filed today, and we’re heard he continues to play hardball on the jurisdiction issue.
FERC claimed that Amaranth “intentionally manipulated the settlement price” of gas futures contracts on Nymex in 2006. Oddly enough this claim also foreshadows the widespread charges of speculator manipulation in energy markets today. It’s like Amaranth was just a mini-version of the crisis, showing us everything that would happen.
The Commodity Futures Trading Commission has also filed charges against Amaranth and Hunter for its natural-gas trading during 2006. That legal battle continues.
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