Hedge fund settles SEC allegations

Amaranth Advisors, a hedge fund that suffered a spectacular collapse last fall and lost $6 billion, has agreed to pay about $717,000 to settle charges of violating securities rules, the Securities and Exchange Commission said.

Amaranth willfully violated rules by improperly covering its short positions, or bets that prices will fall, on stocks of several companies involved in offerings, the SEC said in an order laying out the terms of the settlement. Amaranth, which was based in Greenwich, Conn., also was censured under the agreement, in which it neither admitted nor denied the allegations.

Amaranth is to pay a $150,000 civil fine plus $566,819 in restitution and interest.

The firm bet heavily and wrongly on natural gas prices and lost billions in September as it sold assets at a loss to try to stay afloat. It had begun 2006 with $7.4 billion in assets and hit an August high of $9.2 billion before the slide in the value of its natural gas portfolio.

The employee pension fund of San Diego County lost an estimated $85 million from its investment in Amaranth. Some state regulators and federal lawmakers have pointed to the Amaranth blowup as evidence that stricter government regulation of the $1-trillion hedge fund industry is needed.