Amaranth blurred holdings, says Senate

Amaranth Advisors used a loophole to cloud the extend of its massive gas holdings, according to a Senate report.
JUN 25, 2007
Amaranth Advisors used a loophole to cloud details of its massive natural gas holdings, according to a Senate subcommittee report released today. In a nine-month investigation, the Permanent Subcommittee on Investigations examined millions of trading record from the Intercontinental Exchange and the New York Mercantile Exchange, analyzing prices through 2006. The bipartisan subcommittee found that Amaranth held hundreds of thousands of natural gas contracts, dominating the market from the early part of the year until its September 2006 collapse. At some points, the hedge fund held 100,000 contracts in a single month and at least 40% of the outstanding contracts on NYMEX. The subcommittee found that Amaranth used a legal loophole to dodge oversight. As part of the 2000 Commodity Exchange Act, ICE is exempt from regulation by the Commodity Futures Trading Commission. Amaranth traded heavily on ICE, so neither the CFTC nor NYMEX had complete information about the hedge fund’s natural gas holdings or trades. “Current commodity laws are riddled with exemptions… that make it virtually impossible for regulators to police U.S. energy markets,” said Sen. Carl Levin, D-Mich., in a statement. “We need to put the cop back on the beat in all U.S. energy markets with stronger tools to stop price manipulation, excessive speculation and trading abuses.”

Latest News

Carnegie Investment Counsel sued over valuation suppression
Carnegie Investment Counsel sued over valuation suppression

Retiring RIA seller David Laidlaw alleges the Carnegie valued his stake on $11.7 million EBITA while pitching potential buyers on $21.3 million.

Arch pushes AI portfolio monitoring into pre-investment due diligence
Arch pushes AI portfolio monitoring into pre-investment due diligence

New tool gives RIAs and family offices AI help vetting private market deals, with some users reportedly halving review time.

$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending
$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending

Investors got projected returns dressed up as real ones, SEC says

Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children
Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children

Parents must still act to get the $1,000 federal seed and employer contributions, giving financial advisors a role in the rollout.

FINRA bars former LPL broker for stealing $1.7 million from customers
FINRA bars former LPL broker for stealing $1.7 million from customers

FINRA booted Rudy Anguiano from the industry for “conversion - the intentional and unauthorized taking of another person’s property.”

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains