San Diego County Employees Retirement Association filed a federal securities fraud suit against Amaranth Advisors, three of its officers and its former natural gas trader. The lawsuit, filed March 29 in U.S. District Court in Manhattan, seeks to recover losses the $8 billion system sustained as a result of excessive and unbridled speculation in natural gas futures that was directly contrary to statements made to SDCERA, according to a news release from the county plan.
The system wants to recover losses including its $126.8 million investment in the Amaranth Partners hedge fund, according to Johanna Shick, system spokeswoman. In January, the fund received $48.2 million of the $175 million it had invested in 2005, according to association documents.
Also named in the lawsuit are Amaranth officials Nicholas Maounis, CEO and CIO; Charles Winkler, COO; Robert Jones, chief risk officer; and Brian Hunter, former trader.
In a March 29 letter to investors, Mr. Maounis wrote, While we had hoped to be able to continue distributing cash to investors following the disposition of the funds remaining assets, SDCERAs action today will frustrate these plans. This litigation will not only delay further distributions of cash to investors, it will also deplete the pool of assets that is ultimately available for distribution by virtue of the substantial indemnification and legal expenses that the funds will now incur.
William J. McSherry Jr., partner at the New York law firm of Crowell & Moring and the county systems attorney, could not be reached by press time.