Morning Coffee: J.P. Morgan Exec Bolts for BlueMountain
In a strange twist of fate, James "Jes" Staley, a former rising star at J.P. Morgan who headed the firm’s investment bank before losing power in July, is leaving the company to join BlueMountain Capital Management, a hedge fund that profited from J.P. Morgan’s more than $6 billion trading loss.
Staley was stripped of his day-to-day management responsibilities during a company-wide restructuring effort that was predicated by the now-infamous “London Whale” credit derivatives trade, one that BlueMountain bet against, netting gains of around $30 million, according to The Wall Street Journal. The London-based firm also helped J.P. Morgan exit some of its losing positions following the trading disaster.
News of Staley’s departure should come as no shock to J.P. Morgan chief executive Jamie Dimon. Staley was reportedly pegged as a finalist for CEO openings at Barclays and Baltimore-based Legg Mason last year, but saw each position filled by another candidate. But the writing was on the wall well before then. Reports surfaced last year that Staley informed Dimon of the firm’s lax risk controls before the trading loss, an assertion that J.P. Morgan has denied, according to Bloomberg.
Staley will join BlueMountain Capital as its ninth managing director and will purchase a stake in the firm. BlueMountain, which operates in both New York and London, said it will use the influx of cash to invest in new infrastructure, technology and talent. The firm declined to comment on where it will add people.
In 2011, the 19 people employed at BlueMountain’s London office took home an average of roughly $550,000, with partners receiving another $6.74 million. In his last year at JPMorgan, Staley earned $17.6 million.
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