September 28, 2010 / 10:30 PM / 9 years ago

Case on Amaranth collapse gets class-action status

* Traders can sue as group; over 1,000 claimants possible

* Amaranth accused of manipulating futures contracts

* Amaranth collapsed in 2006 after $6.4 billion losses

NEW YORK, Sept 28 (Reuters) - A U.S. judge ordered Amaranth Advisors LLC, a hedge fund that lost $6.4 billion through bad bets on natural gas prices, to face a class-action lawsuit over its 2006 collapse.

In a ruling dated on Monday, U.S. District Judge Shira Scheindlin granted class-action status to futures traders who bought, sold or held natural gas futures or options on futures contracts from Feb. 16 to Sept. 28, 2006.

The decision means the traders may sue as a group, which could save litigation costs and result in a larger recovery than if they sued individually.

The case “involves more than 1,000 potential claimants who are asserting claims based on common issues,” Scheindlin wrote. “Claimants likely have no interest in pursuing their own claims, which may be prohibitively small.”

Stephen Schwartz, a lawyer for Amaranth, declined immediate comment.

Amaranth founder Nicholas Maounis is among the defendants remaining in the case, Scheindlin wrote.

The traders alleged that during the class period, Amaranth violated U.S. laws governing commodities by manipulating the prices of New York Mercantile Exchange natural gas futures contracts.

Amaranth was based in Greenwich, Connecticut, and once had more than $9 billion of assets. It still faces lawsuits despite its collapse.

The case is In re: Amaranth Natural Gas Commodities Litigation, U.S. District Court, Southern District of New York, No. 07-06377. (Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)

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