Case Abstract
On April 30, 2010, the Honorable Shira A. Scheindlin, District Court Judge for the Southern District of New York, granted Plaintiffs’ motion for pre-judgment attachment in the amount of $72.4 million pursuant to Rule 64 of the Federal Rules of Civil Procedure and Section 6201 of the New York Civil Practice Law and Rules against Amaranth LLC, a Cayman Islands company and the "Master Fund" in the Amaranth master-feeder-fund hedge fund family. In re Amaranth Natural Gas Commodities Litigation, Slip Copy, 2010 WL 1838718 (S.D.N.Y. Mar. 3, 1010) (Scheindlin, J.)("Amaranth"). In so ruling, Judge Scheindlin concluded that the evidence submitted by Plaintiffs was sufficient to demonstrate a probability of success on the merits that Amaranth Advisors LLC, Amaranth LLC’s trading advisor, had manipulated the prices of NYMEX natural gas futures prices in violation of the U.S. Commodity Exchange Act ("CEA"), and that Amaranth Advisors LLC was an "official, agent, or other person" acting for Amaranth LLC for vicarious liability purposes. Id. at *3-4. Furthermore, Judge Scheindlin rejected Defendant’s policy argument that a hedge fund comprised of passive investors should escape liability for the wrongful actions of its trading advisor who was vested with plenary trading authority. Id.at *4 ("I conclude that policy concerns favor plaintiffs’ position. Not only does the market appear to expect the ‘passive’ investor to be responsible for all trades, but to adopt [Amaranth’s] policy rationale would permit account holders to reap all the benefits of their traders’ wrongful conduct without shouldering any of the responsibility when such conduct is discovered."). Lowey Dannenberg expects the decision, the first of its kind in a case brought under the CEA, will have far-reaching implications with respect to hedge funds utilizing an offshore master-feeder-fund structure.
Lowey Dannenberg partners Vincent Briganti and Geoffrey Horn have been appointed as co-lead counsel in In re: Amaranth Natural Gas Commodity Litigation, Case No. 07 Civ. 6377 (SAS), a proposed class action involving the manipulation of NYMEX natural gas futures contract prices by Amaranth Advisors LLC, one of the largest natural gas hedge funds prior to its widely publicized collapse in September 2006.
 
Client
John Special on behalf of a putative class of NYMEX natural gas futures traders.
 
Case Name
In re: Amaranth Natural Gas Commodity Litigation, Case No. 07 Civ. 6377 (SAS).
 
Current Status
On April 27, 2009, Hon. Shira A. Scheindlin denied in part defendants’ motions to dismiss. Plaintiffs’ motion for class certification is currently pending.