March 15 A federal court on Friday ruled that
the chief regulator for electric power does not have the
authority to sanction a trader whose bets helped bring down a
billion-dollar hedge fund, invalidating a $30 million fine.
The U.S. Court of Appeals for the District of Columbia
Circuit ruled that the Commodity Futures Trading Commission
(CFTC) and not the Federal Energy Regulatory Commission (FERC)
has the authority to fine Brian Hunter - a key trader with hedge
fund Amaranth Advisors LLC when it failed in 2006.
Hunter booked some $6 billion in bad bets on natural gas
futures that precipitated the firm's collapse.
The two federal agencies that police investments in the
energy market had each tried to convince the court that they had
the right to handle the Hunter case.
The court said that FERC was wrong to fine Hunter $30
million for manipulation of natural gas futures contracts.
The ruling has no bearing on a class-action case that
Amaranth settled with investors for about $77 million in 2011,
and the CFTC's $7.5 million settlement with Amaranth two years
"Manipulation of natural gas futures contracts falls within
the CFTC's exclusive jurisdiction," the court ruled.
The case was read as a test of the authority of the two
watchdogs that have similar powers to prevent fraud in
billion-dollar markets where sophisticated trades make
operations difficult to police.
(Reporting by Patrick Rucker; Editing by Phil Berlowitz)