Markets - Nat.Gas.$34.71 dn-1.65
Supply and Demand no longer works with the Hedge Fund computer Cowboys.

28-Aug-07 03:12pm
Pending Hedge Fund Unwinding on NG

Aug. 28 (Bloomberg) -- Bank of Montreal, Canada's fourth- largest lender, said its commodities-trading losses swelled by C$97 million ($91 million), weighing on profit for the fourth straight quarter.

Bad bets on natural-gas have cut earnings by C$424 million this fiscal year in the biggest trading debacle for a Canadian bank, and the toll may rise as the company unwinds the remaining C$11.5 billion of investments.

Bank of Montreal said in a statement today that it has been contacted by law- enforcement authorities and securities regulators in connection with the trading losses.

``It raises the question, is there more to come here?'' said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. ``You would have thought they'd have cleaned that up in the second go-round.''

The losses swelled after the bank, which started trading commodities to meet clients' needs, started betting its own money on natural- gas contracts in an ill-fated effort to boost profit.

The bank said in May that it failed to supervise commodity traders and relied too heavily on a single broker, Valhalla, New York-based Optionable Inc., to value its holdings.

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