Amaranth won't face SEC enforcement action

The SEC will not bring an enforcement action against Amaranth Advisors following a three-year investigation, according to an Aug. 19 letter to Amaranth’s attorney from Philip Koski, assistant regional director in the SEC’s Boston office, which was obtained by P&I Daily. The investigation focused on whether Amaranth employees violated Section 17 (a) of the Securities Act of 1933 and made false statements or failed to disclose material facts about the firm’s natural gas futures investments. John Heine, an SEC spokesman, declined to comment. “Needless to say, we are very pleased with the decision,” Nick Maounis, founder, CEO and CIO of the hedge fund, wrote in an investor letter obtained by P&I Daily. On Aug. 12, the Commodity Futures Trading Commission and the Federal Energy Regulatory Commission announced they had concluded a two-year investigation into allegations that Amaranth attempted to manipulate natural gas futures. The firm agreed to pay a $7.5 million settlement without admitting wrongdoing. Amaranth lost about $6.6 billion in the fall of 2006 from failed natural gas bets, and the firm’s funds were closed and remaining assets returned to investors in January 2007.