Arora touts busi­ness back­ground — good and bad

Connecticut Post (Sunday) - - News - By Em­i­lie Mun­son

In the elite world of in­ter­na­tional hedge funds, Harry Arora is a fa­mil­iar name.

Af­ter im­mi­grat­ing to the U. S. from In­dia, Arora worked on the trad­ing desks on two of the world’s most renowned — then no­to­ri­ous — in­vest­ment op­er­a­tions for a decade. Next, he opened and closed his own suc­cess­ful fund.

Now, Arora, a Repub­li­can, wants to bring his an­a­lyt­i­cal mind and mar­kets ex­per­tise to Congress. He is chal­leng­ing Demo­crat Jim Himes, a for­mer Gold­man Sachs banker, for the 4th District seat, which rep­re­sents most of Fair­field County and a slice of New Haven County.

Arora, a Green­wich res­i­dent, takes an op­pos­ing view to Himes on most is­sues, but what they share are re­sumes that boast the names of com­pa­nies that could be po­lit­i­cal li­a­bil­i­ties.

For Himes, be­ing a Demo­crat with Wall Street ties is a no- no in some cir­cles. For Arora, the prob­lem is two names: En­ron and Amaranth Ad­vi­sors.

Arora, 48, was a trader at En­ron from 1995 to early 2002. His job there ended when En­ron filed for what was at the time Amer­ica’s largest Chap­ter 11 bank­ruptcy. Es­ti­mated losses to­taled $ 74 bil­lion. En­ron, once uni­ver­sally con­sid­ered one of the coun­try’s most in­no­va­tive com­pa­nies, be­came known as the poster child for ac­count­ing fraud and cor­po­rate mis­man­age­ment.

“There’s cer­tain things or cer­tain as­so­ci­a­tions that re­ally need more ex­pla­na­tion,” said Arora, who does men­tion En­ron in his cam­paign com­mer­cial. “It was im­por­tant to say ‘ Lis­ten I’ve al­ways done things the right way.’ ”

Then, Arora headed the en­ergy desk for Amaranth Ad­vi­sors, for­merly one of the 50 largest hedge funds in the U. S. Arora and his chief ex­ec­u­tive hired a reck­less young trader, who at first brought mas­sive prof­its to the firm, but whose enor­mous nat­u­ral gas hold­ings even­tu­ally in­curred $ 6 bil­lion in losses and prompted the hedge fund’s liq­ui­da­tion.

Nei­ther of these com­pa­nies’ fail­ures was Arora’s fault.

At En­ron, Arora was a ju­nior trader, re­cruited to the com­pany in his 20s af­ter get­ting his mas­ters in busi­ness ad­min­is­tra­tion from the Univer­sity of Texas. In­ves­ti­ga­tions, law­suits and me­dia re­port­ing af­ter En­ron’s col­lapse found that knowl­edge of and par­tic­ipa- tion in the com­pany’s ac­count­ing fraud was con­fined to En­ron’s high­est cor­po­rate cir­cles. Arora and two other em­ploy­ees who worked him at En­ron told Hearst Con­necti­cut Me­dia they had no idea the tricks ex­ec­u­tives were de­ploy­ing to make com­pany losses ap­pear to be prof­its.

As de­scribed in Bar­bara Drey­fuss’s “Hedge Hogs: the cow­boy traders be­hind Wall Street’s largest hedge fund dis­as­ter,” in a deal with the Brazil­ian gov­ern­ment, Arora showed En­ron In­ter­na­tional’s power plant ne­go­tia­tors that they in­cor­rectly cal­cu­lated the deals in­fla­tion costs: En­ron would lose money not profit. The ne­go­tia­tors – whose bonuses were tied to the prof­its – tried to force the deal through as they orig­i­nally wrote it, but Arora and his boss would not budge. They even­tu­ally rene­go­ti­ated.

Reign­ing in a col­league

Af­ter En­ron, Arora moved to Green­wich to run the en­ergy desk of the new hedge fund Amaranth Ad­vi­sors, which man­aged $ 3.5 bil­lion by the end of 2003, Drey­fuss wrote. The new trader Arora helped hire, Brian Hunter, helped the en­ergy desk gen­er­ate about $ 100 mil­lion in prof­its by the end of 2004,

$ 80 mil­lion of which per­son­ally gen­er­ated by Hunter, Drey­fuss re­ported.

But Arora did not ap­prove of the size and con­cen­tra­tion of Hunter’s hold­ings, the Wall Street Jour­nal re­ported. He shared his con­cerns with his su­pe­ri­ors, who did not rein Hunter in but sep­a­rated Arora and Hunter’s trad­ing desks.

In March 2006, Arora left the firm.

“Harry had a long con­ver­sa­tion with me just be­fore he re­signed from Amaranth where he ex­plained his rea­sons for leav­ing,” Ulf Ek, who worked with Arora at En­ron and Amaranth, wrote in an email Fri­day. “Brian Hunter’s mas­sive risk tak­ing was the de­ci­sive fac­tor for him, and the lack of re­sponse from se­nior man­age­ment in Amaranth to Harry’s con­cerns about Brian.”

Months later, Hunter in­curred bil­lions in losses and the fund was liq­ui­dated.

Arora founded his own Green­wich hedge fund, Arcim Ad­vi­sors, in 2006. The firm opened $ 500 mil­lion, no­tion­ally ad­justed, Arora said — sev­eral times smaller than the Amaranth trad­ing desk he man­aged.

In 2011, Arora be­came a found­ing part­ner at Lon­don- based North­lander Com­mod­ity Ad­vi­sors, headed by Ek. Arora shrunk the size of the Arcim fund as North­lander grew and closed Arcim in 2017. North­lander man­ages about $ 500 mil­lion the Fi­nan­cial Times re­ported.

“The peo­ple who have known ( Arora) over the years know he is an as­tute trader,” said Travis West, manag­ing di­rec­tor of D. E. Shaw in­vest­ment firm, who worked and was friends with Arora at En­ron and now lives in Darien.

But a di­ag­no­sis of kid­ney can­cer in 2015 made Arora re­think his ca­reer. His suc­cess­ful surgery and Sikh faith moved him to com­mit to pub­lic ser­vice. He com­pleted mas­ters in Pub­lic Ad­min­is­tra­tion at Har­vard Univer­sity ear­lier this year.

His ex­pe­ri­ences at En­ron and Amaranth helped him de­cide to run for po­lit­i­cal of­fice, he said.

“For me philo­soph­i­cally, it in­creased my con­vic­tion of do­ing right,” said Arora. “It’s why I’m tak­ing on an en­trenched in­cum­bent.”

Arora, who be­came a U. S. cit­i­zen in 2004, was a regis­tered Demo­crat from 2007 to 2014, vot­ing records show. He says he doesn’t re­meme­ber why he regis­tered as a Demo­crat – per­haps Repub­li­cans aren’t as strong at con­vey­ing their mes­sage to im­mi­grants, he said — but has al­ways had con­ser­va­tive val­ues.

Af­ter a stint un­af­fil­i­ated, Arora regis­tered as a Re- pub­li­can be­fore vot­ing in 2017, records show. He said he was un­aware that his per­sonal foun­da­tion gave $ 2,000 to the Clin­ton Foun­da­tion in 2014 and 2015, as tax doc­u­ments from Arora Foun­da­tion Inc. re­flect.

Arora’s new pas­sion is pol­icy, which he dis­cussed with long- winded en­thu­si­asm in a 21⁄ 2- hour in­ter­view last week. He sup­ports re­plac­ing the Af­ford­able Care Act, dereg­u­lat­ing some busi­ness sec­tors, tak­ing a firm stance against il­le­gal im­mi­gra­tion and en­sur­ing back­ground checks for gun sales.

“I’m do­ing this be­cause I have the skills and the goods to make things bet­ter with pol­icy,” said Arora.

Tyler Size­more / Hearst Con­necti­cut Me­dia

Harry Arora, Repub­li­can Con­gres­sional can­di­date, is chal­leng­ing Jim Himes for Con­necti­cut’s 4th District. Arora has made a ca­reer in hedge funds and en­ergy trad­ing and his firm's of­fice, North­lander Com­mod­ity Ad­vi­sors, is lo­cated in the same build­ing as his cam­paign of­fice.

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