John D. Arnold
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John D. Arnold
John D. Arnold
Born
John Douglas Arnold

1974 (age 44–45)
Alma materVanderbilt University
OccupationPolitical activist, former Enron trader, former hedge fund manager
Net worthSteady$ 3.3 billion (Oct 18, 2019)[1]
Laura Muñoz
Children3

John Douglas Arnold (born 1974) is an American billionaire, former hedge fund manager, and former natural gas trader instrumental in the Enron scandal[2]. His firm, Centaurus Advisors, LLC, was a Houston-based hedge fund, composed of former Enron traders, that specialized in trading energy products.[3][4] Arnold announced his retirement from running the hedge fund on May 2, 2012.[5][6][7][8][9] Arnold now focuses on his political activism through Arnold Ventures LLC

Early life

Arnold was raised in Dallas, Texas, and he was the younger of two sons. His father was a lawyer, and his mother worked as an accountant at Arnold's Centaurus.[5][10] His father died when Arnold was 17.[5][10] A 1995 graduate of Vanderbilt University, he completed a degree in mathematics and economics in only three years.[10] He is a member of Lambda Chi Alpha.[11]

Career

Enron

After college, he began his career at Enron as an oil analyst but was soon promoted to assistant trader.[10] In 1996, he moved to the Natural Gas Desk upon the departure of Jeff Bussan[12], trading natural gas derivatives.[10] Using their new Internet-based trading network, EnronOnline,[] he is credited with making three quarters of a billion dollars for Enron in 2001 and was rewarded with the largest bonus in Enron history, some $8 million, days before the company declared bankruptcy costing shareholders $74 billion.[10][13] His former colleagues dubbed him "king of natural gas."[14][15][16] (His brother, Matthew, also traded at Enron.)[5]

Centaurus

In the wake of the Enron scandal in 2002, he founded Centaurus with his previous year's bonus. According to Arnold, "After Enron collapsed, there was a general revaluation of credit risk among energy companies. The better credits were less willing to take on the lesser credits as counter parties. So the lesser credits found themselves with fewer counter parties willing to trade with them, even though they still needed to hedge the pricing risks in their business. Hedge funds previously had not been involved in the over-the-counter market, except for the very largest, because the other participants were reluctant to grant credit to that type of entity."[17]

During the collapse of Amaranth Advisors, Centaurus is widely credited as being one of the major players on the other side of their position, returning as much as 150% in 2005.[18]

At an energy conference, Arnold stated that he looks "to place bets on a market that he determines is 'biased'... we ask ourselves can we identify what is forcing a market to price a product at an unfair value, and then, what will push it back to fair value." Referring to the speculative trading taking place on the unregulated over-the-counter Intercontinental Exchange (ICE) and NYMEX's Clearport Trading, he said: "Trading never went away... what has changed is the non-commercial type of interest... because of this there has never been as much investor interest as there is today."[19]

During August 2008, Centaurus acquired around 10% of the shares of National Coal Corporation (NCOC).[20]

Arnold gave a public speech to the U.S. Commodity Futures Trading Commission (CFTC), in which he opposed limits on financially settled trading positions but supported limits in the physical energy futures as they near expiration. Arnold said, "I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value." [21][22][23]

Philanthropy

The Laura and John Arnold Foundation was a private foundation founded by Arnold and his wife Laura.[24] The organization was founded in 2008, the same year that the Arnolds signed the Giving Pledge, a pledge by some high-net-worth individuals to donate a large fraction of their income to philanthropic causes during their lifetimes.[25] In October 2018, it was reported that Arnold had spent more than $100 million in health-care related grants since 2014, with a particular focus on reducing pharmaceutical drug costs.[26]

Since 2008, the foundation has invested more than $1 billion, ostensibly in the areas of pension reform, pretrial and criminal justice reform, prescription drug price reform, the quality of academic research, combating predatory higher education practices, the evaluation of social programs, school system governance reform, and electoral reform. However, the organization has also generated controversy with its algorithmic pretrial risk assessment tool that has been sued for potentially leading to at least two murders.[27][28] In 2016, the group funded unconstitutional[] aerial surveillance of Baltimore's historic neighborhoods. [29]

In 2019, the organization was transformed into a limited-liability company composed of the former foundation, a donor-advised fund, and the Action Now Initiative advocacy organization - the new entity is known as Arnold Ventures LLC with the charter "to remove barriers between data and decisive action, working swiftly across the policy-change spectrum."[30]

Personal life

Arnold is married to Laura Elena (Muñoz) Arnold. She is co-chair of the Laura and John Arnold Foundation She is a graduate of Harvard College, Yale Law School and has a Master of Philosophy degree in European Studies from the University of Cambridge.[31] She was formerly an attorney in Houston, Texas and an oil company executive. They have three children.[32]

References

  1. ^ Forbes: The World's Billionaires - John Arnold 18 October 2019
  2. ^ Apple, Sam (2017-01-23). "The Young Billionaire Behind the War on Bad Science". Wired. ISSN 1059-1028. Retrieved .
  3. ^ Ahmed, Azam (2012-05-03). "John Arnold Is Said to Close Hedge Fund and Return Investor Money". The New York Times. Retrieved .
  4. ^ Kumar, Nishant (2013-05-02). "Hedge fund Centaurus to return cash, shut Asia office: source". Reuters. Retrieved .
  5. ^ a b c d "When a billionaire trader loses his edge - The Term Sheet: Fortune's deals blogTerm Sheet". Finance.fortune.cnn.com. 2012-05-04. Archived from the original on 2013-09-20. Retrieved .
  6. ^ "Houston billionaire trader John Arnold retiring at 38 - Houston Chronicle". Chron.com. 2012-05-02. Retrieved .
  7. ^ Kate Kelly (2012-05-02). "Legendary Energy Trader John Arnold to Retire". Cnbc.com. Retrieved .
  8. ^ Kroll, Luisa. "Hedge Fund Billionaire John Arnold's Fund Was Up When He Announced He Was Getting Out". Forbes. Retrieved .
  9. ^ "Ex-Trader at Enron to Retire From Hedge Fund". Online.wsj.com. Retrieved .
  10. ^ a b c d e f New York Times: "CORPORATE CONDUCT: THE TRADER; Enron Trader Had a Year To Boast of, Even If..." By DAVID BARBOZA July 09, 2002
  11. ^ "Lambda Chi Alpha - Notable Alumni". lambdachi.org. 2013-08-14. Retrieved .
  12. ^ "A speculator who is in for the long haul". Financial Times. May 14, 2008.
  13. ^ New York Times, "Energy Trading, Post-Enron", January 15, 2006
  14. ^ "'King of Natural Gas' John Arnold retiring". MarketWatch. Retrieved .
  15. ^ Vardi, Nathan. "The King Of Natural Gas Quits". Forbes. Retrieved .
  16. ^ Demos, Telis (2009-11-24). "Centaurus's John Arnold: The king of natural gas - Nov. 24, 2009". Money.cnn.com. Archived from the original on 2013-12-13. Retrieved .
  17. ^ "Futures & Options Trading for Risk Management - CME Group". Nymex.com. Retrieved .
  18. ^ Tett, Gillian (2006-12-20). "Smart trades that made this a good year for some". FT.com. Retrieved .
  19. ^ "The Role of Market Speculation in Rising Oil and Gas Prices: A Need To Put The Cop Back On The Beat" (PDF). Hsgac.senate.gov. Retrieved .
  20. ^ [1]Houston Business Journal, "Centaurus scoops up National Coal shares" August 29, 2008
  21. ^ Demos, Telis (2009-11-24). "Centaurus's John Arnold: The king of natural gas - Nov. 24, 2009". Money.cnn.com. Retrieved .
  22. ^ "Energy Trading Mogul Warns on Trading Limits". The New York Times. 2009-08-05. Retrieved .
  23. ^ "John D. Arnold's CFTC (U.S. Commodity Futures Trading Commission) speech" (PDF). Cftc.gov. Retrieved .
  24. ^ Apple, Sam (January 22, 2017). "The Young Billionaire Behind the War on Bad Science". Wired.
  25. ^ Preston, Caroline (October 16, 2011). "A Thirtysomething Billionaire Couple Take on Tough Issues Via Giving". Chronicle of Philanthropy.
  26. ^ Loftus, Peter (2018-10-21). "A Billionaire Pledges to Fight High Drug Prices, and the Industry Is Rattled". Wall Street Journal. ISSN 0099-9660. Retrieved .
  27. ^ Wing, Nick (2017-07-31). "Dog The Bounty Hunter Joins Lawsuit Against Chris Christie Over Bail Reform". HuffPost. Retrieved .
  28. ^ "Did A Bail Reform Algorithm Contribute To This San Francisco Man's Murder?". NPR.org. Retrieved .
  29. ^ Broadwater, Kevin Rector, Luke. "Report of secret aerial surveillance by Baltimore police prompts questions, outrage". baltimoresun.com. Retrieved .
  30. ^ Candid. "Laura and John Arnold Foundation to Restructure as LLC". Philanthropy News Digest (PND). Retrieved .
  31. ^ Baylor College of Medicine: "Laura Arnold named to BCM Board of Trustees" by Lori Williams September 26, 2008
  32. ^ "Our Team | Laura and John Arnold Foundation". Arnoldfoundation.org. Archived from the original on 2015-02-08. Retrieved .

External links


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