Amaranth withdraws lawsuit against Touradji

By Joseph A. Giannone

NEW YORK, Nov 16 (Reuters) - Collapsed hedge fund operator Amaranth LLC has withdrawn a lawsuit accusing hedge fund firm Touradji Capital Management LP of using proprietary information to profit at Amaranth's expense.

No money is changing hands, according to a press release issued jointly by the two firms on Monday.

On Sept. 18, Amaranth filed a summons and notice that accused Touradji, the largest U.S.-based commodities hedge fund, of unlawfully using confidential information it gained during talks that led to a September 2006 purchase of Amaranth's base metals portfolio.

Touradji denied it had violated its agreement with Amaranth. It said the allegations against it were spread by two former employees, Gary Beach and his son Gentry Beach. The pair have filed their own lawsuits alleging that Touradji founder Paul Touradji, a protege of Tiger Management legend Julian Robertson, owes them millions of dollars in unpaid bonuses.

Greenwich, Connecticut-based Amaranth racked up $6.4 billion of losses from wrong-way natural gas contracts before it folded in 2006 in the largest hedge fund collapse ever. The firm continues to defend and pursue various lawsuits, however.

Since filing the initial notice, a preliminary step before filing a formal complaint, Amaranth has investigated the claims against Touradji, including taking a look at Touradji's trading records.

"Amaranth's decision to withdraw its claims vindicates our position that we acted appropriately and with the utmost of professionalism," Paul Touradji said in a statement.

"It also clearly validates our previous statement that the Amaranth suit was based on the misinformation of two disgruntled former employees involved in separate litigation" with Touradji Capital, he said.

Touradji Capital earlier this month filed a counter-lawsuit against the Beaches and another ex-employee, Robert Vollero, accusing them of spreading false breach-of-contract allegations that have tainted the firm's reputation and prompted some investors to pull out. (Reporting by Joseph A. Giannone; Editing by Lisa Von Ahn and John Wallace)