Abstract
On June 25th, 2007, the U.S. Senate Permanent Subcommittee on Investigations released a report on the Amaranth debacle, entitled, “Excessive Speculation in the Natural Gas Market.” The report was released in conjunction with the subcommittee’s public hearing on the same date. The 135-page report (and its further 345 pages of appendices) provides a wealth of detail on the largest hedge-fund debacle to have thus far occurred. In carrying out their forensic analysis, the Senate subcommittee examined several million individual trades. The subcommittee obtained this information by subpoenaing records from the New York Mercantile Exchange (NYMEX), the Intercontinental Exchange (ICE), Amaranth, and other traders.The report basically covers two areas: (1) It provides factual detail on how massive Amaranth’s natural-gas positions were; and (2) It discusses how inadequate the U.S. regulatory approach currently is in the face of large-scale energy trading. This review will mainly summarize what the report covered, and then will briefly touch upon important areas that the report omitted.
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