Amaranth sues JPMorgan for $1B

Claiming to be the victim of a financial conspiracy, Amaranth Advisors L.L.C. has sued JPMorgan Chase for at least $1 billion.

The Greenwich hedge fund collapsed in September 2006 after incorrectly forecasting spreads in natural gas prices.

In a lawsuit filed in New York State Supreme Court in Manhattan, Amaranth accused JPMorgan Chase of misstating the value of its assets in order to buy them on the cheap.

In the lawsuit and an investor letter cited by Bloomberg News, Amaranth founder Nicholas Maounis claims that after JPMorgan Chase took a $2.5 billion cash “concession,” the bank interfered with Amaranth”™s attempts to sell its investment portfolio for $1.9 billion to Goldman Sachs Group Inc. or Citadel Investment Group L.L.C. JPMorgan reportedly sold the Amaranth portfolio to Citadel for $725 million.

But for JPMorgan”™s actions Amaranth”™s losses would have been “survivable and far less dramatic,” in Maounis”™ words.

In a statement, JPMorgan denied responsibility for Amaranth”™s collapse and said its conduct was proper.