From today's WSJ:

Brian Hunter, the energy trader whose bad bets triggered the collapse of hedge fund Amaranth Advisors, filed a legal action seeking to block the Federal Energy Regulatory Commission from bringing an enforcement action against him.

FERC, which regulates the sale of physical natural gas, has been investigating trading activity at the failed hedge fund along with the Commodity Futures Trading Commission, the main futures-market regulator.
...
Amaranth lost more than $6 billion, largely from losing natural-gas trades, last fall and soon announced it would close. Its failure is the subject of civil litigation and regulatory investigations and it was at the center of a report released in June by the Senate Permanent Subcommittee on Investigations that contended its trading distorted natural gas prices and led in some cases to higher costs for natural gas consumers such as electric utilities.

Hunter had 40% of the outstanding NYMEX gas futures contracts, in which case his behavior would clearly affect prices. Unfortunately for him, once everyone found out about his predicament, they used this against him, and aggravated his losses. But there are not any CFTC rules against this, as most rules on position limits relate only to NYMEX contracts. So I don't know on what grounds they would go after him--he exploited a true loophole.

As he lost $6B, one would think that is punishment enough, but he does seem to be getting away with murder, in that he put on a really large calendar spread on oil, bet big and personally pocketed around $75mm in 2005 after making $1.26B in profits, the next year he lost $6B and got no bonus on the same dumb trade. That annualizes at $37.5mm/year, not bad. As a further reward, some Middle Eastern investors are giving him $650mm for his next venture (he lost $6B? Brilliant!). So he seems to have done quite well in the whole fiasco, and while I think he is a fool, he didn't seem to break any laws. There are lots of rich and popular people, who are rich and popular for doing things I think are really stupid, being stupid isn't illegal. When I'm feeling evil I would like to put them in orange jumpsuits picking up trash on the side of the road for 10 years, but that's more my problem with life being unfair.