A federal judge in New York has approved a $77.1 million settlement in a class action suit brought by natural gas futures traders against busted hedge fund Amaranth Advisors and its head gas trader Brian Hunter, filing show.
US District Court Judge Shira Scheindlin in the US District Court for the Southern District of New York in Manhattan tentatively approved the deal December 15 (Docket: 07-CV-06377). She scheduled a final hearing for March 27 in New York.
Included in the class are any purchasers of the monthly NYMEX futures contract in 2006 up until Amaranth collapsed in September of that year.
The settlement combines four different actions, accused Hunter and Amaranth of manipulating the gas futures market in 2006 by furiously selling NYMEX futures in the minutes before the contract rolled off the board for the month, artificially depressing the price of the contract.
Neither Hunter nor Amaranth admitted any wrongdoing in reaching the settlement in suits brought by gas futures traders John Special, Roberto Gracey, and others.
They repeated the arguments made by US Commodity Futures Trading Commission, the Federal Energy Regulatory Commission, and the US Senate's Permanent Subcommittee on Investigations -- that Hunter and Amaranth benefited from the low NYMEX price by holding a huge off-setting swaps position out of sight of regulators on the IntercontinentalExchange.
Hunter's lawyers weren't immediately available to comment on why Hunter settled this action with Amaranth when he declined to do so when FERC and the CFTC each settled their market manipulation cases against Amaranth itself in August 2009 for $7.5 million apiece.
Instead, Hunter, who has maintained his innocence of any market manipulation in trading NYMEX gas futures in 2006, fought a FERC show cause order and was hit with a record $30 million fine in April. Hunter has appealed that judgment to the US Circuit Court for the District of Columbia.
Hunter's appeal challenges FERC's action, arguing the regulator of the physical gas markets does not have authority over futures trades, a position the CFTC agrees with. FERC says it has jurisdiction because the NYMEX price sets the price for index trades of physical gas.
