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Administration June 8, 2007
Amaranth Requests SD Pension Fund Suit Be Tossed
June 9, 2007 (PLANSPONSOR.com) - Amaranth Advisors
LLC filed a motion Thursday to throw out a lawsuit by the San
Diego County Employees Retirement Association (SDCERA), which
lost a substantial amount of its $175 million investment when
the hedge fund crashed.
Reported by Adrien Martin
The pension fund sued Amaranth in March, claiming that thefund was injured “as a result of excessive and unbridled speculation in natural gas futures that was directly contrary to statements made to SDCERA that Amaranth would be diversified and risk controlled.” SDCERA is asking for $150 million in damages (See San Diego County Fund Sues Amaranth ).
Amaranth’s motion to dismiss claims that SDCERA’s Chief Executive Brian White knew the risks of investing in speculative strategies that used leverage to expand bets in volatile and illiquid markets and weren’t required to be diversified. Further, Amaranth claimed, its documents were clear about that risk, according to the MarketWatch report.
“SDCERA took a known risk and lost money,” the hedge fund said in the motion, according to MarketWatch. “It now seeks to recover, both its initial investment and unrealized profits earned through the speculative trading that this lawsuit decries. The law, however, requires investors who knowingly make risky investments to take the bad with the good.”
The fund had already received approximately $48.2 million in partial distributions in January following the hedge fund adviser’s liquidation (See San Diego County Fund Gets $48M Repaid in Amaranth Collapse ).