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.
Goldman Sachs operates a secretive prop trading group known as Multi-Strategy Investing. The unit has no clients; it invests roughly $1 billion of Goldman’s own funds in the market, despite the Volcker rule.
Federal regulators plan to increase oversight on private trading venues known as dark pools. The Financial Industry Regulatory Authority will also look to boost enforcement over high-speed trading.
Russell Wasendorf Jr., the son of jailed Peregrine Financial Group Russell Wasendorf Sr., is being sued by former clients who believe, as chief operating officer, he should have known that his father was embezzling client funds. The younger Wasendorf is now looking for work as a consultant.
A New Jersey man has admitted to having worked with HSBC bankers to hide millions of dollars from the Internal Revenue Service.
Struggling finding work in the private sector? Try knocking on the door of your local and state governments, which are expected to add employees in the coming year for the first time in a half-decade.
Deutsche Bank says UBS’s fixed income plan is incomprehensible and unworkable.
Taking Their Exit (Financial News)
Karim Abdel-Motaal and Bart Turtelboom, co-heads of GLG Partners’ Emerging Markets Fund, are leaving the firm to launch their own hedge fund.
Buzz Around the Office
People do weird things on subways. Here are 15 pieces of visual evidence.
List of the Day: Bad Career Advice
Career advice is often filled with untrue clichés. Here are a few to watch out for.
- Do what you love and the money will follow.
- If you’re unsure, go to grad school.
- A college degree will get you a job.