Securities Regulation: Commodity Exchange Act

摘要

For a discussion of the underlying facts, see the case summary for In re Amaranth Natural Gas Commodities Litigation, 612 F.Supp.2d 376, 173 O.&G.R.550 (S.D.N.Y. 2009), supra. In this phase of the litigation, defendants Amaranth LLC ("Master Fund') and Amaranth Advisors, LLC ("Advisors") are still subject to the plaintiffs' vicarious liability claims. The Master Fund seeks to distribute some $75 million of its remaining $185 million in assets to investors and former employees. The plaintiffs object to the proposed transfer. The relationship of the Master Fund and Advisors was that the Advisors served as the Master Fund's "Trading Advisor" pursuant to various written agreements. The Master Fund ceased active operations in September 2006 and has distributed funds to investors since then. Four of those distributions, totalling nearly $2.2 billion were consummated prior to the initiation of this litigation. The plaintiffs seek to file a writ of attachment under FRCP 64 as to $72.8 million of the proposed $75 million distribution since they do not challenge $2.2 million in distributions to non-Amaranth employees. FRCP incorporates the state law of attachment, which in this case involves New York law. Under New York law, the issuance of an attachment order is discretionary once the party seeking the order shows a need and a likelihood of success. The plaintiffs have to show that more likely than not their vicarious liability claims under the CEA will succeed. The court determines that the claims against the Advisors is likely to succeed based on the allegations of the complaint and Federal Energy Regulatory Commission hearings that .concluded that the lead natural gas trader for the Advisors manipulated NYMEX natural gas futures contracts. It is also likely that plaintiffs will be able to show that the Advisors acted as the agent for the Master Fund in making these manipulative trades. The court also believes that because the Master Fund is not qualified to do business in New York, the need for the order of attachment is quite strong.