A few years back, a hedge fund in Greenwich went out of business. Perhaps you’ve heard of it. Was called Amaranth Advisors. Was run by a guy named Nick Maounis. Had this lovable goof of a Canuck named Brian Hunter making natural-gas trades. Brian was always up for a good laugh and one day, on a lark, put on some trades that resulted in the firm losing, I don’t know, like $6.6 billion. It’s was hilarious! Maybe you had to be there, but I’m telling you, it was pant-pissingly funny. Definitely one of the best things to happen to the hedge fund community in a while.
Anyway, Maounis went on to start a new fund called Verition with most of the gang from the old shop, except for Hunter, who did some work for Peak Ridge Capital and also spent the last few years unsuccessfully fighting fighting what he believed was a bum rap re: market manipulation (on good, non-firm-destroying trades).
The US Federal Energy Regulatory Commission Thursday fined former Amaranth Advisors natural gas trader Brian Hunter $30 million -- the highest penalty ever assessed by the agency -- for what it said was his manipulation of the natural gas market in 2006. The agency imposed the fine after it agreed with the findings of an FERC administrative law judge, who ruled that Hunter artificially manipulated the closing prices of the NYMEX March, April and May 2006 gas futures contract to benefit offsetting positions he held on the IntercontinentalExchange. Hunter, who has maintained his innocence, was not immediately available for comment and was not at the proceeding.
This is the first time that the federal agency, which oversees the often mundane details of trading and pricing of electricity and natural gas, has taken a market-manipulation case before an administrative judge. In a statement, FERC said it found that "Hunter sold significant numbers of futures contracts" at times when the market was vulnerable to big price swings "with the intent to depress prices and financially benefit his significant derivative positions held on other platforms." Susan Court, a lawyer who brought the case against Hunter when she led FERC's Director of Enforcement and is now in private practice, called the
commission's unanimous approval of the Hunter findings "huge," adding "that litigation sets a precedent" that negotiated settlements cannot. She said the $30 million fine "will definitely get the attention of natural gas and electricity traders."
US FERC fines former Amaranth gas trader Brian Hunter $30 million [Platt's]