Defunct hedge fund Amaranth Advisors that lost some $6 billion in natural gas futures trades gone wrong in 2006, agreed to settle a $77mn class action lawsuit with a group who accused the fund of manipulating gas prices.  The 2007 case was filed in U.S. District Court for the southern district of New York in Manhattan.  A final hearing is scheduled for 3/27/12. Plaintiffs claimed that Amaranth held "dominant positions in March 2006 through April 2007 NYMEX natural gas contracts" and "used these dominant positions to artificially inflate the "spread" prices between summer 2006 contracts and winter 2006-2007 contracts." Amaranth also is accused of manipulating NYMEX natural gas futures prices by "slamming the close" - i.e., purposefully driving the contract prices lower "in order to benefit Defendants' non-NYMEX natural gas positions and further inflate spread prices." The class action suit representatives included gas traders Roberto Calle Gracey, John Special and Gregory Smith, and it's not clear how many members the suit will draw - but lawyers are preparing to send a notice of settlement to large NYMEX traders and tap clearing brokers to find out who may fit within the lawsuit's parameters.

Louis Burke, a lead lawyer representing the plaintiffs in the case, said :  "It was a fair settlement for the class."

In April, the U.S. Federal Energy Regulatory Commission (or, FERC) ordered Amaranth natural gas trader Brian Hunter to pay a $30 million fine for market manipulation, which Hunter is appealing.   [Reuters, 12/21/11]