The failure of amaranth wasn't what you might think - if you really consider it a failure at all...... The failure on the part of Amaranth was the fact that they billed themselves as a large, multi-strategy fund, when really they were really just all NG speculation. there was really no difference between them and centaurus (aside from the fact that they were on opposite sides of the same trade!) Their customers failed themselves when they had absolutely no problem whatsoever when Amaranth reported a 25% return on their money in one month. Bottom line is, it takes a ton of risk for a shop to return 25% in a month. investors should have pulled their money if they didn't have thhe stomach for that kind of risk. Personally, if anyone has seen that they failed in that situation, it was regulators. they had no control over the size of positions that amaranth was taking, (they hid behind a veil of saying that the market will work itself out) and they are trying vigorously to change that which is good.
oh, and as for the loss angle, the spin is to say how they "learned from their losses" so that they wont do it again. losses can be great for a trader - if they learn from them.
Hm, and how would third party be able to calculate value of OTC product, which is not even marked to market, but rather to an algorithm???