* BlueMountain Capital bet against JPM CIO in 'Whale' trade
* Fund had targeted JPM traders, risk managers before big
By Emily Flitter
NEW YORK, Feb 28 BlueMountain Capital, a hedge
fund involved in JPMorgan Chase & Co.'s $6.2 billion trading
loss last year, tried to recruit several employees in the bank's
chief investment office in the months before the losses,
according to two people familiar with the matter.
The New York-based hedge fund had targeted people in the
trading and risk management divisions of JPMorgan's
chief investment office, the same part of the bank where Bruno
Iksil, the trader who became known as the 'London Whale' for his
outsized positions in a small derivatives market, was working.
None of JPMorgan's CIO employees left the bank for
BlueMountain in 2011 or 2012 during the time the $12.5 billion
hedge fund had sought to lure them away, said a person familiar
with the situation.
The sources who confirmed the recruiting attempt by
BlueMountain did not suggest anything improper by the hedge
fund. However, the development adds a new thread to the already
tangled connection between BlueMountain and JPMorgan over the
When losses from Iksil's trades began to mount as a group of
hedge funds, including BlueMountain, bet against Iksil's
positions, a complaint was raised by some inside the bank about
BlueMountain's prior recruiting efforts, according to the
It's not clear what those bank employees complained about,
"BlueMountain has no comment on recruiting efforts, out of
respect for the confidential nature of their conversations with
candidates," a spokesman for the hedge fund said.
Months after the big trading loss became public, one
JPMorgan employee would eventually leave for a post at
BlueMountain: Jes Staley, the former CEO of JPMorgan's
investment bank. Staley left for the hedge fund after being
shifted to a lesser role at the bank last year in the wake of
the 'Whale' losses. He announced his move to BlueMountain on
Staley did not respond to requests for an interview.
Reuters previously reported that traders inside the CIO were
worried that they had come under a coordinated attack from hedge
funds in the fairly illiquid market where positions in the CDX
index are traded. The CDX index is an index representing the
prices of selected corporate credit default swaps.
Last spring, when prices in the CDX market started moving
against them, causing large losses, Iksil and his boss accused
JPMorgan's investment bank and its traders of deliberately
trying to move the market against the CIO by leaking information
on its position to hedge funds.
The investment bank itself had taken a position opposite the
CIO in the CDX market.
A lawyer for Iksil declined to comment.
After betting against the CIO positions, BlueMountain then
helped JPMorgan unwind the CIO's trades once a public firestorm
over the losses forced the bank to quickly exit the positions.