Amaranth Reaches Deal With Federal Energy Regulators

By Tina Seeley

Nov. 25 (Bloomberg) -- Amaranth Advisors LLC and two of its former traders reached a settlement with federal regulatory staff over the alleged manipulation of natural gas futures prices, according to a regulatory filing.

The settlement, submitted to the Federal Energy Regulatory Commission yesterday, could end the case against the hedge fund and traders Brian Hunter and Matthew Donohoe. The commission accused them last year of manipulating prices on the New York Mercantile Exchange and proposed a $291 million fine.

The settlement, “if approved by the commission, will resolve all claims asserted against all respondents,” Chief Administrative Law Judge Curtis Wagner wrote in a filing today. An agency judge also must certify the settlement, Wagner wrote.

A separate case against Greenwich, Connecticut-based Amaranth and Hunter brought by the Commodity Futures Trading Commission is still in litigation, according to agency spokesman Dennis Holden. That case alleges attempted manipulation of gas prices during the same time period in 2006, and seeks a permanent ban on Hunter from trading in markets it oversees.

Hunter has filed several court cases seeking to block the Federal Energy Regulatory Commission from moving forward with its enforcement action. Hunter’s lawyers say the energy regulator doesn’t have jurisdiction over alleged violations in futures markets, and that the commodity regulator has the sole authority.

The Commodity Futures Trading Commission has also said in court filings that it has sole authority to punish any wrongdoing in futures markets.

Calls to spokesmen for Amaranth and Hunter were not immediately returned.

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.