On September 15, 2014, the Commodity Futures Trading Commission (“CFTC”) filed a consent order signed by Brian Hunter, previously a natural gas trader for trading firm Amaranth Advisors LLC (“Amaranth”), pursuant to which Hunter will pay a civil penalty of $750,000, plus post-judgment interest, to resolve allegations that he manipulated the natural gas futures market in 2006. Additionally, Hunter agreed to be “permanently restrained, enjoined and prohibited from directly or indirectly trading any futures contracts, options on futures contracts, or any other product or financial instrument regulated by the [CFTC].”
Originally the CFTC filed a civil enforcement action against both Amaranth and Hunter in 2007, alleging the manipulation of gas futures prices at the New York Mercantile Exchange (“NYMEX”), a CFTC-regulated exchange, in violation of the Commodity Exchange Act (“CEA”). In 2011, FERC separately determined that Hunter manipulated physical natural gas markets in violation of section 4 of the Natural Gas Act while working as the head natural gas trader for Amaranth. See January 28, 2010 edition of the WER. According to both the CFTC and FERC, Hunter intentionally manipulated the settlement prices of natural gas futures contracts on NYMEX in order to benefit swap and option positions in other trading platforms.
Hunter appealed FERC’s decision to the United States Court of Appeals for the District of Columbia (“D.C. Circuit”), contesting FERC’s jurisdiction in the matter. On April 25, 2012, the CFTC filed a petition at the D.C. Circuit supporting Hunter’s jurisdictional argument, claiming that section 2(a)(1)(A) of the CEA granted exclusive jurisdiction over futures trading to the CFTC. On March 15, 2013, the D.C. Circuit determined that FERC did not have the authority to fine Hunter $30 million for manipulating natural gas futures markets. Instead, the D.C. Circuit determined that the CFTC has “exclusive jurisdiction over all transactions involving commodity futures contracts” and that nothing in the Energy Policy Act of 2005 clearly and manifestly repeals CFTC’s exclusive jurisdiction. See March 18, 2013 edition of the WER.
The consent order has been filed and signed by the U.S. District Court for the Southern District of New York. Although Hunter agreed to all of the penalties described in the consent order, he neither admitted nor denied the allegations contained in the CFTC’s original complaint.
A copy of the CFTC’s consent order can be found here.