08/12/2009 OS 05 FAX 212 905 7906 

UNITED STATES DISTRICT COURT 

SOUTHERN DlSTRJCf OF NEW YORK 

U.S. COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

v. 

AMARANTH ADVISORS L.L.C., ct al., 

Defendants. 

JUDGE CHIN'S CHAMBERS 

07 Civ. 6682 (DC) 

ECFCASE 

CONSENT ORQER OF PERMANENT INJ\JNCfiON. CJYlL MONETARY PENALTY AND 

OTHER BELIEF AS TO DEEENDANTS AMAIW:ITH ADVISORS L.l.C. AND 

AMARANTH ADVISORS CCAIJlARYl ULC 

On July 25,2007, plaintiff U.S. Commodil)' Futures Trading Commission (the 

"Commission" or "CFTC'') filed a Complaint against Amaranth Advisors L.L.C., Amaranrh 

Advisors (Calgary) ULC (tollectively, the "Amaranth Defendants") and Brian Hunter ("Hunter"') 

(collectively, the "Defendants"), alleging that the Defendants intentionally and unlawfully 

attempted to manipulate: the price of natural gas futures contracts on the New Yortc Mercantile 

I 

Exchange ("NYMEX") on February 24 and April 26, 2006 In violation of Sections 6(c), 6(d), 

and 9(a)(2) of the Commodity Exchange Act, as amended ("Act'1, 7 U.S.C. §§ 9, IJb, a"d 

13(a)(2) (2006), and that Amaranth Advisors L.L.C. made material misrepresentations to 

NYMEX in violation of Section 9(a)(4) ofthe Act, 7 U.S.C. § 13(a)(4)(2006). The Complaint 

seeks statutory and equitable relief, including pcnnancnt injunctions and civil monetary 

penalties, for violations of the Ac~ 7 U.S.C. §§ I er nq. (2002). Thereafter, the Defendants tiled 

a motion to dismiss, which the Court denied. The Defendants filed their answers on July 9, 

2008. 

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J. 

CONSENTS AND AGREEMENTS 

1. To effect settlement of lh-'= matters alleged in the Complaint in this action prior to 

a trial on the merits or funher judicial proceedings, the Amaranth Defendants: 

a. Consent to the entry of this Consent Order or Permanent Injunction, Civil 

Monetary Penalty and Other Relief ("Order"); 

b. Affinn that they have read Brld agreed to this Order voluntarily, and that no thn:at 

or promise other than as set forth specifically herein, has been made by the 

Commission or any member, officer, agent or representative thereof, or by any 

other person, to induce consent to chis Order; 

c. Acknowledge service upon them of the Summons and Complaint in this action; 

d. Consent. solely for the purposes of settlement. to the jurisdiction of the Coun in 

this action; 

e. Admit that venue pr:operly lies wllh this Coun pursuant to Section 6c of the Act, 7 

u.s.c. § l3a-l. 

f. Waive: 

i. The entry of findings ot fact and conc\usions of law; 

ii. Any and all claims that they may possess under the Equal Access to 

Justice Act {EAJA), S U.S.C. § 504 (2006) and 28 U.S.C. § 2412 (2006), 

relating to, or arising from, this action: 

iii. Any and all claims that they may possess under the Small Business 

Regulatory Enforcement Fairness Act, J 996 HR 3 J 36, Pub. L. l 04~ 121, 

§§ 231- 223, I I 0 Stat. 862-63 ( 1996), as amended by Pub. L. No. II 0.28, 

J 21 Stat. 1 J 2 (2007). relating to, or arising from, this action 

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lv. AnY claim of Double Jeopardy based upon the instlnnion oflhis 

proceeding or the entry i., lhis proceeding of any order imposing ll civil 

monetary penalty or any other relief; and 

v. All rights ofappeal in this acrlon. I 

g. Asrcc thai they will not oppose enforcement of the order on the ground that il 

fails to comply with Rule 6S{d) of the Federal Rules of Civil Procedure and waive 

any objections based thereon: 

h. Consent to the continued jurisdiction of this CoW1 for the purpose of enforcing 

the terms and conditions of this Order, to assure compliance with the Order. and 

for any other purposes relevant to this action, even irthc Amaranlh Defendants 

now or in the future reside(s) outside the jurisdiction; and 

i. Agree that neither the Amaranth Defendanls nor any agents or employees under 

their respective authority or control shall take any action or make any public 

statement denying, directly or indirectly, any allegation in the Complaint or in this 

Order, or creating, or tending to create, the imp~ssion thai the Complaint or d!is 

Order is without a factual basis: provided, however, that nothlns In this provision 

shallarrect the Amoru~th Defendants• (I) testimonial obligations; or (ii) right to 

take positions in other proceedings to which rhe Commission is not a party. The 

Amaranth Defendants shall take all steps nece.998ry to ensure their agenrs and 

employees under their respccti'!e authority or conrro1 comply with this provision. 

2. By consenting to the entry ofthis Order, the Amaranth Defendants neither admit 

nor deny the alles•tions contained in the Complaint. except as to jurisdiction and venue, which 

the Amaranth Defendants admit. The Amaranth Defendants do not consent to the use oflhe 

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allegations ofthe Complaint as the so.le basis for any other proceeding brought by the CFTC, 

other than: any proceeding to enforce tho terms of this Order; any Commission reglstmllon 

proceeding relating to any of the Amaranth Defcndanu pursuant to Section 8a of the Act, 7 

U.S.C. § 12a(l), and/or Pan 3 oflhe Commission's Regulations, 17 C.F.R. §§ 3.1 etseq.; and/or 

any proceeding in bankruptcy filed by or apinsl any of the Amaranth Defendants. The 

Amaranlh Defendants agree that lhe alleeations of the Cornplalnt shalt be laken as true and 

correct and be sivcn preclusive effect, without further proot: solely In: (a) any proceeding to 

enfo"" this Order; (b) any Commission registration proceeding relating to any of the Amaranth 

Defendants pursuant to Section 8a of the Act, 7 U.S.C. § lla(l), and/or Part 3 of the 

Regulations. 17 C.F.R. §§ 3.1 et seq.; and/or (c) any proceeding In bankruptcy filed by or against 

any ofthe Amaranth Defendants prior to full satisfaction ofthe Amannth Defendants' civil 

monetary penalty obligation as set forth below in Section Ill of this Order. I 

3. This Consent Order fully and finally resolves all claims and allegations brought 

by the CFTC against the Amaranth Defendants in tbis action. 

II. 

ORDER FOR PERMANENT INJUNCTION 

JT IS HEREBY ORDERED TifAT: 

1. The Amaranth Defcndanu arc permanently restrained, erijoined and prohibited 

from directly or lndireccly engaging in any conduct that violates Section!! 6(c), 6(d), and 9(a)(l) 

of the Act, 7 U.S.C. §§ 9, llb, and J3(a)(2) (2006}, including manipulating or attempting to 

manipulate the prite of any commodity in interstate commerce or for future delivery on or 

subject to the rules ofa registered enticy. 

2. Defendant Amara~lh Advisors L.L.C. is further permanently restrained, enjoined 

and prohibited fi'om directly or indirectly engaging in any conduct that violates Section 9(a)(4) of 

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the Act, 7 U.S.C. § 13(a)(4)(2006), including willfully falsifying, concealing, or covering up by 

any trick. sc:heme, or artifi~e a material fact, making any false, fictitious, or fraudulent sratements 

or representations, or making or using any false writing or document knowing the same to 

contain any false, fictitious, or fraudulenl statement or entry to a registered entity, board oftrade 

or futures association designated or registered under the Act acting in funhcrance of its official 

duties under the Act. 

3. The injunctive provisions ofthls Order mall be binding on the Amaranth 

Defendants, upon any person acting In the capacity of officer, agent. servant, or employee ofany 

ofthe Amaranth Defendants, and upon any pe~n who receives actual notice of this Order by 

personal service or otherwise insofar as he or she is acting In active concert or participation wllh 

any of the Amaranth Defendants. 

. 

Ill. 

ORDER FOR CIVIL MONETARY PENALTY 

AND OTHER ANCILLARY RELIEF 

IT IS HEREBY ORDERED THAT: 

I. The Amarunth Derend~nts a8rce to a joint and several civil monetary penalty in 

I 

the amounl of$7.S million ($7,500,000), plus post-judgment interest, pursuant to Section 6c of 

the Act, 1 U.S.C. §13a-J (the "CMP ObJigation11),1o be poid In acconhi.ncc with paragraphs3, 4 

and 7 below. 

2. Post-judgment interest shall accrue on the Amaranlh Defendants' CMP Obligation 

beginning on the date paymen• is due and shall be determined by using the Treasury Bill rate I 

prevailing on the date of entry or this Order pursuant to 28 u.s.c. § 1961 I 

3. SS.S million (SS,SOO,OOO) oflhe CMP Obligation shall be paid within ten days 

from the date of entry of this Order. l)le $2 million (Sl,OOO,OOO) balance ofthe CMP Obligation 

shall be paid on the earlier of(a) thirty days from the receipt· by the Amaranth Defendants of 

,; 

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dl.srributlons of cash to Amaranth Advisors L.L.C. from its capital accounts with Amaranth 

Capital Partners LLC and/or Amamnth Partners LLC or (b) the later or one year from the date of 

entry of this Order or 1he date on which the Fedeml Energy Regulatory Commission ("FERC") 

Issues an order resolving by senlement and consent the claims against the Amaranth Defendants 

and other respondet~ts (except Brian Hunter) In the maner captioned ln.Je Amaranth AdyjsOQ1 

L.L.C. et al" Docket No. rN07·26-4lOO, Order to Show Cause (FERC July 26, 2007) (the "FERC 

OSC"). 

4. Payments by the respondents in the FERC OSC, other than Brian Hun1er, in 

satisraction of any ciYil penalry entered In the FERC OSC shall satisfy the CMP Obligation up to 

a total orS3.7S million. 

S. Any amount paid pursuant to this Order that is clawed back from the CFTC, 

FERC, or any other agency, commission or branch of the U.S. government in the course of any 

bankntpt~y proceeding shall not be counted towards full satisfaction of the CMP Obligation. 

6. Upon payment in full or in pan of the CMP Obligation, the Amaranth Defendants 

shall simultaneously transmit copies of the cover lener, which contains the name and docket 

number orthis proceeding, and lhe ronn of such payment to; tho Director, Division of 

Enforcement. Commodity Futures Trad,ng Commission, Three Lafayette Centre, I ISS 21st 

Street, N.W., Washington, D.C. ~0581; and the Chief, Office ofCoopcnttive Enforcement, 

Dlvi!llon of Enforcement, Commodity Futures Trading Commission, Three Lafayette Centn:, 

I ISS 21st Street. N.W., Washington, D.C. 20581. 

7. CMP Oblisation paymenlS ro !he CFTC hereunder shall be made by eleco-onic 

fUnds transfer, U.S. postal money order, certified cheek, bank cashier's check, or bank money 

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order. If payment is to be made other lhan by electronic funds trusfer. the payment shall be . . 

made payable to the Commodity Futures Trading Commission and sent to the address below: 

Commodity Futures Trading Commission 

Division ofEnforcement 

Attn; Muric Bateman- AMZ-300 

DOTIFAAIMMAC 

6500 S. MacArthur Blvd. 

Oklahoma City, Oklahoma 73169 

Telephone: 40~-9S4-6S69 

If payment is to be made by clcclronic f!Jnds transfer. the Amaranth Dcfcndanl.s shall contact 

Marie Bau:man or her successor at the above address to receive payment instructions and shall 

fully comply with those instructions. Such payment shall be accompanied by a cover lener that 

contains the name and docket number orthis proceeding. 

IV. 

MISCELLANEOUS PROVISIONS 

I. . Notices. All notices required by this Order shall be sent by certified mail, return 

receipt requested, or by facsimile, as follows: 

a. Notice to Plaintiff: 

Division of Enforcement 

Commodity Futures Trading Commission 

140 Broadway, 19111 Floor 

New York, New York 1000~ 

Fax: (646) 746-9940 

b. Notice to Defendants Amaranth Advisors L.L.C. and Amaranth Advisors 

(Calgary) ULC: 

c/o David Mollon, Esquire 

Winston & SIJ'Ilwn LLP 

200 Park A venue 

New Vork, New York 10166 

Fax: (212}294~700 • 

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2. Successors and Assigns. This Order shall inure to the benefit of and be binding 

on the Amaranth Defendants' .succCssors, assigns. heirs, beneficiaries and administrDtors. 

J. Countemaru. This Order may be executed by the parties in countcrpans and by 

facsimile. 

4. Entire Aereement. Amendments and Severability. This Order incorporates all of 

the tenns and conditions of the settlement among the panies. Nothing shall serve to amend or 

modify this Order in any respect whatsoever, unless: (I) reduced to writing, (2) signed by all 

parties, and (3) approved by order of the Court. 

~. Invalidation: If any provision orthis Order, or trthe application of any provisions 

or circumstances Is held invalid, the remainder of the Order and the application ofthc provisions 

to any other person or circumstance shall not be affected b)' the holding. 

6. Waiver: The railure of any pany hereto at any time or times to require 

pcrfonnance or any provision hereof shall in no manner affect the right of such party at a later I 

time to enforce the same or any other provision of this Order. No waiver in one or more 

instances of tho breach ofany provision contained in this Order shall be deemed 10 be or 

construed as a further or continuing waiver of such breach or waiver oflhe breach of any other 

provision of this Order. 

7. Cooperation: The Amaranth Defendants shall cooperate fully with the 

Commission, including the Commission's Division of Enforcement ("Division''), in this 

proceeding, and in any Investigation, civil litigation, or administrative matter related to the 

.subject maner of this proceeding or any current or future Commission investigation related 

thereto. As part of such cooperation. the Amaranth Defendant agrees to: 

I. provide in a rcasonab,le time ~nd manner testimony, depositions, and/or 

Interviews, and to.restify completel)' and truthfully in any such proceeding. trial, 

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or investigation. Tile Amaranth Defendants would be entitled to reimbursement 

for the statutory allowances for attendance and tnvel in associated with such 

cooperation; and 

2. comply fully, promptly, and lruthfillly with any inquiries or request.!! for 

information including but not lim lted to Inquiries or requests: 

i. for authentication of documents; 

ii. for any docuqtenrs within the Amaranth Defendant's possession, custody, 

or control, including inspection and copying of documents; 

iii. The Amaranth Defendanrs designate David E. Moll6n, Esq. to receive all 

requests for information pursuant to this undertaking. Should the 

Amamnth Defendants seek to change the designated person to recei"c 

such requests, nolice shall be given to the Division of such intention 14 

day! before it occurs. Any person designated to receive such request shall 

be located in the Uniled Stares. 

8. Acknowledgments: The Amaranth Defendants understand and acknowledge that 

this Order must be accepred and 1'8tlfl~d by the Commission before il becomes final. 

9. ContinujnR Juri,sdjction of this Cpun! The Court shall retainjurisdiclion of this 

cause to assure compliance with this Or~er and for all other pUTposes related to this action. I 

10. Authority: a) Amaranrh Advisors L.L.C. ·the person executing this Order on 

behalf Amaranth Advisors L.L.C. represent!, warrants and covenants tha! he/she is a corporate 

representative of Amaranth Advisors L~~.c .. thar this Order has been duly authorized by I 

Amaranth Advison L.L.C., and that he/she has been duly empowered to sign and submit it on 

behalf of Amaranth Advisors L.L.C.: and b) Amaranth Advisors (Calgary) ULC - the person 

executing this Order on behalf Amaranth Advisors (Calgary) ULC represenrs, warrant\s and 

covenanlS that he/she is a eorporare representative of Amaranth Advisors (Calgary) ULC, that 

this Order hBS been duly authorized bx Ammnth Advisors (Calaary) ULC. and that he/she has 

been duly empowered to sign and submit it on beh'alfof Amannth Advisors (Calgary) ULC. 

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II. There being no just ~n for delay,lhe Clerk of the Comt is hereby directed to 

enter Ibis Consent Order of Permanent Jqjunclion, Civil Monelary Penulay 4Dd Other Relief as 10 

DefendaniS AmiU1Ulth Advisors L.L.C. ond AmllnU1th AdvisoD (Calgary) ULC. 

SO ORDEREDa!NcwYorlc, NewYod.lhis /;;I-~or ~-<.2009. 

~C------ - Unired States District Judge 

Consented to and 

Approved for Entry by: 

Consented to and approved for enrry by: 

Dated:__, 2009 

1)/...,. 

Dated:~ 2009 

Dated: f6:l . 2009 

Dated: _. 2009 

David Moll6n, Esquire 

Wmston & Strawn LLP 

200 Park Avenue 

New Yorlt. New York 10166 

Fax:(212)294-4700 

Anomeys for Defendants Amaranth Advisors 

L.L.C. and Amannth AdvisoJS (Calgary) ULC 

~~3) Alan Malllllo on behaJfofDefendanr Amanmth 

Advison LL.C. 

~~~~',, Alan Matano on behalf of Defendant Amamnlh 

Advisors (Calgary),U.L.C. 

Stephen J. Obic 

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11. There being no just reason for delay, the Clerk of the Coun is hereby directed 10 

enter this Consent Order of Permanent Injunction, Civil Monetary Penalty and Other Relief as lo 

Defendants Amaranth Advisors L.L.~. and Amaranth Advisors (Calgary) ULC. 

SO ORDERED at New York, New York this ___ day of ______ , 2009. 

Denny Chin 

United StAtes District Judge 

Consented 10 and 

Approved for Entty by: 

Consented to and approved for l.'ntry by;,-·.:..-. / .. (\. V~'IJ..~, /. I -

dl.ted: ____,) 2009 ! -....L.;:=""!'-~~~~~....-:7'T.__~,._ 

Dated: ___. 2009 

Dated:~ 2009 

1 · oll61( Esqu re 

Win n wn\LLP 

200 Park Avenue 

New York, New York 10166 

Fax: (212)294-4700 

Anomeys for OefendanLs Amaranth Advison 

L.L.C. and Amaranth Advisoi'B (Calgary) ULC 

Alan Matano on behalf of Defendant Amaranth 

Advisors L.L.C. 

Alan Matano on behalf of Defendant Amaranth 

Advisor!! (Calgary) U.l..C. 

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~ CJ..~<" \D I 

Dated: ~. 2009 ~wblli tehen J. Obie 

UNITED STATES DISTIUCT COURT 

SOUTHERN DISTRICT OF NEW YORK 

Acting Director, Division of Enforcement 

Vincent A. McGonagle 

Senior Deputy Director 

Manal Sultan [MS 8068] 

ChiefTrial Attorney 

David W. MacGregor 

ChiefTrial Attorney 

U.S. COMMODITY FUTURES TRADING 

COMMISSION 

140 Broadway, 19111 Floor 

New York, New York 10005 

(646) 746-9761 

(646) 746-9940 (facsimile) 

Attorneys for Plaintiff 

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