Class action charges Amaranth, Morgan with manipulating natgas


From Reuters
Thursday, July 12, 2007

NEW YORK -- A trader sued Amaranth Advisors LLC on Thursday, alleging that he lost money because the hedge fund that collapsed last year after $6 billion in losses manipulated natural gas prices.

Roberto Gracey, who traded natural gas futures contracts, alleged that Amaranth amassed large positions, causing the price of natural gas futures contracts on the New York Mercantile Exchange and InterContinental Exchange to be artificial, according to the complaint in the U.S. District Court in Manhattan.

"When defendants' unlawful scheme of highly leveraged trading collapsed in September 2006, the price of natural gas and natural gas futures contracts traded on NYMEX experienced an almost unprecedented drop," the complaint alleged.

"Defendants' manipulative trading caused traders of natural gas futures contracts, including plaintiff, to suffer substantial losses," it said.

The lawsuit, which also names Amaranth's principal Nicholas Maounis and JPMorgan Chase & Co., one of the fund's prime brokers, is seeking class-action status. It seeks to represent people who bought or held NYMEX natural gas futures contracts between Feb. 23, 2006, and Sept. 20, 2006.

A JPMorgan representative and lawyers representing Amaranth and Maounis in another case were not immediately available for comment.

Gracey's lawyer was not immediately available for comment.

Amaranth, a hedge fund manager with about $9.3 billion in assets last year, imploded last September after billions of dollars in bets in the natural gas market went sour.

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