Looking to return what’s left of clients’ money after losing in excess of $6 billion on wrong-way natural gas bets during September, Amaranth Advisors LLC has hired Fortress Investment Group LLC to help sell its hedge-fund holdings, according to Associated Press reports.

Amaranth founder Nicholas Maounis warned investors last month of significant losses due to bad bets in the natural gas futures arena over just a few days in September. He said the net asset value of the multi-strategy fund had declined “approximately 65% month-to-date” through Sept. 19 and “approximately 55% year-to-date.” This would put month-through Sept. 19 losses for the company — which managed $9.5B as of August– somewhere in excess of $6 billion (see Daily GPI, Sept. 19; Sept. 25).

The report Monday that Fortress has been brought in to help liquidate followed word late last week that the Greenwich, CT-based hedge fund was preparing to shut down, a move the fund had vowed not to make. Despite the significant hit to the fund’s net asset value, Maounis said in late September that Amaranth intended to begin scheduling one-on-one meetings with investors and that the fund planned to continue operations while working to restore their confidence. “Amaranth is determined to earn back its investors’ trust, and one step towards that end is to share as much information as we reasonably can,” he said in a letter to investors in late September. “We assure you that we are eager to do so.”

However, investor demands for redemption of their investments reportedly became more strident and unmanageable, leading to the move to hire Fortress. According to reports Monday, the amount of money investors get back depends on how effectively the $3 billion in assets held by the firm’s two main funds are liquidated. Maounis assured investors that fees associated with Fortress’ help will be paid by Amaranth and not by the Amaranth funds. Amaranth refused to comment on the report while calls to Fortress were unreturned as of time of press.

New York-based Fortress is a global alternative investment and asset management firm founded in 1998 with over $24 billion in equity capital under management. Its affiliates have offices in Dallas, Frankfurt, Geneva, Hong Kong, London, Rome, San Diego, Sydney and Toronto.

Immediately following reports of Amaranth’s troubles, the fund sold its energy portfolio at a loss to J.P. Morgan Chase & Co and Citadel Investment Group LLC. The fund was in talks to sell the remainder of its holdings to Citigroup, but those talks broke down last week, according to sources close to the situation.

News surrounding Amaranth’s meltdown has focused on the lack of regulation of hedge funds and over the counter markets. Robert McCullough, manager of McCullough Research, said last week he believes Amaranth trader Brian Hunter — who had amassed the significant natural gas position — quite possibly attempted to corner the natural gas market and that the “lack of federal oversight” of energy markets and hedge funds by the Federal Energy Regulatory Commission, the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC), helped him almost accomplish his goal (see Daily GPI, Sept. 27).

Immediately following the news of Amaranth’s difficulties, Connecticut Attorney General Richard Blumenthal reiterated his long-standing call for more oversight of hedge funds in general. Blumenthal said he is “collecting evidence and reviewing facts” concerning the large losses at Amaranth and renewed his call for “greater transparency and disclosure” in the hedge fund industry. (see Daily GPI, Sept. 20).

Sen. Dianne Feinstein (D-CA) joined the chorus of criticism last week, blaming the CFTC for its failure to properly perform its oversight responsibility for energy trading markets. Feinstein also renewed her call for passage of legislation she has sponsored to increase transparency and accountability in energy trading markets for oil and natural gas (see Daily GPI, Sept. 28).

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