The CFTC & FERC vs Amaranth: Doing the Sister Regulator Act
31 October 2007
By Dr. Sharon Brown-Hruska with Robert Zwirb of Cadwaladar, Wickersham, and Taft
In this article from the Futures and Derivatives Law Report, NERA Vice President Dr. Sharon Brown-Hruska and Robert Zwirb of Cadwaladar, Wickersham, and Taft address the jurisdictional issues that have arisen in the wake of the rise and fall of defunct hedge fund Amaranth Advisors. On 25 July 2007, the Commodity Futures Trading Commission (CFTC) announced that it was filing an enforcement action against Amaranth and its former head trader for allegedly attempting to manipulate the price of natural gas futures contracts; on the following day, the Federal Energy Regulatory Commission (FERC) announced that it, too, was bringing an enforcement action against the same defendants for the same conduct. The authors argue that the FERC's broad and expansive view of its jurisdiction creates regulatory and legal uncertainty that imposes additional burdens and costs on market participants, exchanges, and financial intermediaries, which ultimately could harm their willingness to assume risks and to innovate new products and markets.
