Almost two years after his natural gas trades cost Amaranth Advisors’ clients more than $6 billion and sent the hedge fund into a death spiral, Brian Hunter is speaking out on the ordeal. The man vilified by investors, regulators and the press as all that is wrong with hedge funds doesn’t think he did much wrong, and is shocked by the venom directed at him because of it.
“I must be a bad guy,” Hunter tells Fortune magazine, which tracked him down at his Calgary, Alberta office. A young, very rich hedge fund trader? “You couldn’t ask for a more toxic mix” in the public’s eye, he says.
Hunter declined to go into too much detail, given the various lawsuits and regulatory actions involving himself and Amaranth. But he is “not particularly chagrined” about his role in the death of the once $9 billion Greenwich, Conn.-based firm, according to Fortune.
Despite his reputation as a very aggressive trader, and regulatory complaints that call his actions “extreme,” Hunter denies that his natural gas bets were especially enormous. “We were big, but we weren’t the biggest,” he claims. He calls the $6.6 billion Amaranth lost on his trades a “giveback” in a market where huge swings aren’t uncommon; indeed, his correct bet on natural gas the year before turned Amaranth a cool $1 billion profit, thanks in part to Hurricane Katrina’s pushing natural gas prices up.
Hunter, who has thus far avoided the questions of reporters and who will not allow his picture to be taken—Fortune describes him “quite cute in a conventional way” with blue eyes, curly dirty-blond hair and a crooked front tooth—is distressed about his portrayal in the media, and especially with his treatment by the regulators who have him in their sights.
He lashed out at the Federal Energy Regulatory Commission, which has sued him for market manipulation, and gave his side of the infamous story of his testimony before it. Hunter says FERC Chairman Joseph Kelliher’s story that he “was in the middle of an interview and there was a lunch break, and he never came back” is a complete fabrication. Hunter claims the interview never happened, because his lawyer refused to allow him to testify on video, though Hunter says he would have done so.
He’s equally angry towards the Commodity Futures Trading Commission, which he says gave the impression that its civil charges against him were actually criminal. And he is incredulous that the two federal agencies seeking his scalp are playing by two different sets of rules: The CFTC has alleged attempted market manipulation, while FERC charges actual market manipulation, because the two define it differently.
“It’s like driving 60 miles per hour when the speed limit is 65 miles per hour,” Hunter complained to Fortune. “A different highway patrol stops you and says, ‘Our rule is 45 miles per hour.’ So you get a ticket.”
Which is not to say that he’s conceding anything.
“The law is clear,” he said. “You have to have an element of fraud or deceit, because anyone who trades a large position is going to move the price. The price moves because of large sellers and buyers! It’s ridiculous to say that if a person trades believing he’s going to move the price, that’s illegal.”
Despite losing so much so publicly, Hunter had raised $1 billion for a new fund, Solengo Capital Advisors, just months after Amaranth’s collapse. But investors who were OK with his losing $6.6 billion in one fell swoop balked at investing with a guy charged with market manipulation.
“Lost money is a black mark, but just the allegation that you did something illegal is a non-starter,” he said.