A look at Himes challenger Arora’s business past,
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 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 master’s degree in business administration from the University of Texas.
Investigations, lawsuits and media reporting after Enron’s collapse found that knowledge of and participation in the company’s accounting fraud was confined to Enron’s highest corporate circles.
Arora and two other employees who worked with 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.
Reining 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 was 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 he 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.
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 a masters in public administration at Harvard University 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,” Arora said. “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 remember 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 Republican 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 two-and-a-halfhour 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,” Arora said.