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The man who lost $6 billion

Brian Hunter brought down Amaranth with disastrous trades on gas. He is accused of manipulating the markets. He has been called the 'destroyer of all worlds.' But is he such a bad guy?

By Bethany McLean, editor-at-large
Last Updated: July 8, 2008: 12:19 PM EDT


(Fortune) -- There's a certain allure to the archetype of the rogue trader.

As Jane Austen might have said, it is a truth universally acknowledged that a man who single-handedly loses a large fortune, especially one that wasn't of his own making, must be way more interesting than the average man. After all, not just any old someone gets the chance to destroy massive amounts of capital, let alone force an entire company, and maybe even the entire market, to the edge of disaster - or over it. Those who do become part of business lore: Nick Leeson, Yasuo Hamanaka, Brian Hunter, Jerome Kerviel.

But does the reality measure up to the myth?

Brian Hunter, the former head natural-gas trader for Amaranth, the $10 billion hedge fund that infamously imploded in the fall of 2006 after Hunter's bets on the price of natural gas went spectacularly wrong, has earned himself a permanent spot among the legends.

Hunter has been accused of losing upwards of $6 billion, which until Kerviel came along was the biggest loss by a single trader in the history of securities markets. Business Week recently included him in its "Rogues' Gallery of Traders," which the magazine explained was a "notorious list of fraudulent trades." likes to call him the "destroyer of all worlds." Hunter is facing accusations involving market manipulation by the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC), a civil case brought by a former Amaranth investor, and a consolidated class action case.

Fittingly, Hunter is an international man of mystery. We do know that he is young - he was a mere 32 when Amaranth collapsed. We know that he is rich. He made roughly $100 million in 2005, the year before his luck ran out. But we don't know his view of events or even what he looks like, because Hunter hasn't talked or allowed anyone to take his picture. He likes to greet reporters who show up looking for him and tell them that Brian Hunter isn't there.

So Fortune went in search of Brian Hunter, not just because we were curious to see what he looked like (no, we didn't get his picture either) but because we wanted to know who he is. Is Hunter the sort of person who, after losing billions of other people's dollars, is penitent about it? (Not really.) Can a trader who loses billions get a job managing money again? (Yes, but ...) Does the ability to lose billions require any special personality traits? (Not really.)

And the biggest question of all: What if, behind the loss of a great fortune, there lies something that isn't exactly a crime?

Stalking Brian Hunter requires a trip to Calgary, Canada, where his new office is a former radio station on the second floor of a three-story building in a somewhat dilapidated part of town. Hunter turns out to be a tall, rangy man, with blue eyes, curly dirty-blond hair, and a crooked front tooth. He's quite cute in a conventional way. He wears the typical trader uniform of jeans and a button-down shirt and drinks Diet Pepsi. He says that even here in his home city he goes unrecognized, though he drives a Bentley Arnage. He says it performs well in the Calgary winter, although it's clear that Hunter, who also owns a Ferrari F430 Spider, really likes expensive cars.

Hunter is not especially arrogant or intense or brash. (He is Canadian, after all.) He's a family guy who talks more about his wife, Carrie, and his two young sons than about nights out on the town, and he's more of a math geek than a trader type. ("I'm a numbers guy," he says.) He's most enthusiastic when he's talking about the technical aspects (and are they ever technical) of trading natural gas. But he is self-aware enough to understand the perception of him. "I must be a bad guy," he says, ticking off the counts against him. Trader. Young. Rich. Hedge fund. "You couldn't ask for a more toxic mix. It's really frustrating, right?"

That's about as emotional as Hunter gets. But it's clear he doesn't think that what has happened to him is exactly fair (which explains why he agreed to talk to Fortune). He's not upset so much by the charges against him - although he says he's innocent - as he is by the extraneous stuff that has accompanied them. For instance, at a press conference held by the CFTC, a reporter asked if Hunter's passport would be taken away. That would happen only if he were facing criminal charges. But Hunter and his lawyer, Michael Kim, say that the CFTC's enforcement director didn't clarify the distinction. In Hunter's view that left the impression that the charges against him might be, in fact, criminal. (The CFTC says that it never comments on whether there might be criminal interest in a case from another agency and notes that its press release about Hunter says the charges are civil.)

The Case(s) Against Hunter
Authorities think that when Brian Hunter was Amaranth's head natural gas trader, he attempted to manipulate the market. They can't agree how.
Senate Permanent Subcommittee on Investigations Federal Energy Regulatory Commission Commodity Futures Trading Commission
The large positions Hunter took in the natural-gas market caused consumers and businesses to pay inflated prices for their gas. Hunter manipulated the closing prices of the NYMEX natural-gas futures contract lower, so as to benefit short positions on another exchange. Hunter tried to manipulate the closing price of the NYMEX natural-gas futures contract lower— but didn’t necessarily succeed.
“In 2006, excessive speculation by a single hedge fund, Amaranth Advisors, altered natural gas prices, caused wild price swings, and socked consumers with high prices.” — Senator Carl Levin “The Commission is right to propose close to the maximum in penalties for actions that harmed millions of consumers and the natural-gas markets they depend on for their energy needs.” — Joseph Kelliher, Chairman “This case demonstrates the Commission’s ongoing vigilance to punish those who attempt to compromise the integrity of the futures markets.” — Walter Lukken, Acting Chairman
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