By Jesse Westbrook
June 18 (Bloomberg) -- JPMorgan Chase & Co.’s Deepak Gulati
is holding talks with investors as he and a team of traders
consider leaving the bank to start a hedge fund, said four
people with knowledge of the discussions.
head of global equity proprietary
trading, attended a conference held by Goldman Sachs Group Inc.
in Rome last week to meet backers, said the people, who asked
not to be identified because Gulati’s plans aren’t public. About
20 JPMorgan traders work with Gulati, who probably wouldn’t
start his firm before next year, the people said.
He follows a growing group of traders who’ve left firms
including Goldman Sachs Group Inc. and Citigroup Inc. since the
collapse of Lehman Brothers Holdings Inc. in 2008 triggered a
global financial crisis and prompted regulators to try and limit
risk-taking by banks.
The U.S. Congress in 2010 approved the so-called Volcker
rule, named after former Federal Reserve Chairman Paul Volcker
to curtail banks from using their own capital to make wagers on
stocks and bonds. While the provision hasn’t yet gone into
effect, firms have been shutting down proprietary trading desks
to comply with the law.
JPMorgan spokesman Patrick Burton
declined to comment on
Gulati’s plans. The trader, who is based in Zurich, didn’t
return a call to his office seeking comment.
The bank decided
in 2010 to move Gulati and other
proprietary traders to its asset management business to comply
with the Volcker rule, because money would be invested on behalf
of clients. The New York-based company selected Mike Stewart
oversee the 50 relocated traders, a person briefed on the
decision said in February 2011. The bank was considering giving
them about $2 billion of so-called seed capital, which would be
replaced with money from outside investors over time, according
to another person with knowledge of the discussions.
Stewart, who had been co-head of JPMorgan’s global emerging
markets business, has since left
to start Whard Stewart Asset
Management Ltd., a London-based hedge fund.
Gulati joined JPMorgan in 2003 from Dresdner Kleinwort
Ltd., according to his registration with the U.K.’s Financial
have called for the Volcker rule to be
stiffened after JPMorgan disclosed last month that its chief
investment office lost at least $2 billion trading derivatives.
Prior to the disclosure, JPMorgan and other lenders had urged
regulators to relax parts of the provision, arguing that strict
interpretation of the rule could stop banks from hedging risks.
Gulati’s division is separate to the unit responsible for
the JPMorgan losses.
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--With assistance from Saijel Kishan
in New York. Editor: Edward
Evans, Jon Menon
To contact the reporter on this story:
in London at +44-20-7392-0426 or
To contact the editor responsible for this story:
Edward Evans at +44-20-7073-3190 or