Around the Desk Lots of News Around the Desk This Week… The Amaranth and Energy Transfer Partners announcements kept us all busy this week, but there were a couple other bits worth noting…Energy stocks took it on the chin again this week as the Dow cratered around 400 points on Thursday, the second-worst trading day of the year... Emissions Desk Businesses are catching on about the upside of climate change, both in terms of new products and opportunities, but they’re a bit vague on the details when it comes to downside risks. Desk Chiefs The one-two punch from FERC and the CFTC against Amaranth, Brian Hunter and very likely some of his former merry men this week was big, big news. But the details once they became better known, were a bit, well, odd... Gas Storage Box Scores & Market Buzz Another Week, Another Revision, Er, Reclassification. A revision by any other name, eh? In three weeks, 17 Bcf of changes to the weekly tallies. It’s a significant number by any standard. This week, unlike last time, the reclassification of base-to-working gas made just about everybody come off looking like a genius storage forecaster... CFTC Lands a Big Fish More Details on the Taking of Amaranth Wednesday was an altogether good day for Greg Mocek, the CFTC’s venerable enforcement chief. After a yearlong investigation into multiple counts of alleged mischief on the part of defunct hedge fund Amaranth Advisors and its principle gas trading wizard, Brian Hunter, it all came together this week as charges... The Desk Energy Curves Exclusive Forward Price Data Provided by Energy Curves LLC Power Stats & Intel NRG Stream   Credit Risk Desk And More! Subscribe Now

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Jim Newsome, the former CFTC chief who now heads NYMEX, seems to think the CFTC’s charges against Amaranth and Brian Hunter was a good hit indeed for the commission, despite what some market observers have suggested. He’s quick to remind us that “this isn’t exactly over” because “(CFTC enforcement chief) Greg Mocek mentioned on a couple occasions during a press conference that the ‘discovery process’ was still open.” Newsome says the CFTC “can add to the current charges when it deems necessary. It could, for example, can change it from ‘attempted manipulation’ to ‘manipulated’ or add completely new charges.”
Or could the DoJ pick up the ball and indict them?
“Sure could,” he tells The Desk.

Newsome admits that he’s unaware of the extent of Justice Dept. involvement, or how much cooperation between agencies has occurred. But he does say that if you’re trying to bring criminal charges against someone, the bar is a heck of a lot higher to meet.
“If they (DoJ) are looking at it, it would certainly take them longer to bring their case forward, compared to the CFTC.”

In all, Newsome says this was a good hit for the commission, and for that matter, for the monitoring/investigation folks at NYMEX.
“I think it’s a good solid hit. (But) I think some people will try to make this as political as possible…”
You don’t read it that way?

“Not at all,” he says.

“Our investigation, which we turned over to the CFTC, happened well before this became a political question.”
It was our impression, at the Mocek press conference this week, that quite a few questions from reporters seemed to point to lapses in control at NYMEX that allowed Amaranth to do what it has been accused of doing. Alternatively, little was said about any sort of “lack of transparency” on the ICE, which has become this Summer’s favorite political football among energy committees in both houses of Congress.

Newsome begged to differ. Strongly.

“I don’t see it that way. You have market participants trading all the time, and they’re going to do what they’re going to do. In this case, and many others, we recognized that something wasn’t quite right. We were uncomfortable with what we saw (Amaranth’s trading strategy) and we stopped it. We contacted Amaranth, started our investigation and made the CFTC aware of it. Then they took over the investigation, which is their right to do,” Newsome tells The Desk.

On the related matter of market transparency, he says the point he was trying to make on the Hill recently is that what we have here is not an example of a failure, but a success. “Were this to have happened on ICE, nobody ever would have seen it. They would have had no idea if this or anything else was going on,” he says.
“I think some people are missing the point here. The point is, as an SRO, we saw it and took appropriate steps to correct it… On ICE, the regulators did not have the ability to see, nor did ICE have the responsibility or authority to do anything about it,” he says.