On July 23, 2009, the Commission’s Enforcement Litigation Staff (“Staff”), Amaranth Advisors LLC (“Amaranth”), and one of Amaranth’s two former gas traders filed a new settlement in its high-profile enforcement case. The Commission previously rejected a settlement submitted by the parties earlier this year (See February 20, 2009 edition of the WER).
The settlement filing last week also showed that one of Amaranth’s former gas traders accused of manipulating gas markets is not a party to the new settlement. As such, the trader has been severed from the settlement proceedings and will have to continue to represent himself on his own according to the proceeding schedule already set by the Commission.
In July 2007, the Commission issued a Show Cause Order against Amaranth for certain trading practices that took place over the course of three days in early 2006. During that time period, Amaranth was alleged to have made as much as $168 million in profits by engaging in massive selling in short intervals in ways that benefited Amaranth’s gas derivatives positions. The Show Cause Order directed Amaranth to explain why it should not be fined $291 million.
After the parties came to the Commission with a proposed settlement in November of 2008, the Commission found that the settlement was not in the public interest because the proposed fines were insufficient. The Commission went on to state that it estimated Amaranth’s profits from its market manipulation actions were far in excess of the proposed settlement. Amaranth meanwhile has consistently claimed its innocence and stated that its traders conducted valid speculative trades.
The newest settlement is not public and has been completely redacted. However, the settlement will be fully released if and when it is approved by the Commission. While such a settlement would normally go to an Administrative Law Judge for approval first, the Commission has granted a request to have the settlement go directly to the Commissioners.