http://ransquawk.com/headlines/jpmorgan-jpm-named-as-defendant-in-second-aluminum-anti-trust-suit-06-08-2013From Reuters:
For the Masters of commodities at JPMorgan, a sense of deja vu
Fifteen years ago, a boom in global commodity trading was underway, and JPMorgan was late to the game.
Trying to catch up with Wall Street rivals, JPMorgan recruited a young trader, Danny Masters. Within a few years, it had built a global platform that eclipsed its peers. At last it was a major player in markets from oil to metals.
Then it pulled the plug. Regulatory scrutiny in metals markets had tarnished its reputation; the gains from shipping oil around the world no longer seemed worth the risk.
On Friday, history repeated itself.
JPMorgan Chase & Co. announced it would try to sell or spin off its physical commodity trading assets and operations, dismantling an empire built over five years by commodities chief Blythe Masters, 44, ex-wife of Danny Masters.
The announcement came almost 15 years to the day after the bank said it would end its first big foray into raw materials, led then by Danny when the couple was still married.
The operations for sale now account for as much as two-thirds of the bank's $2 billion-plus commodity revenues. They include 72 metal warehouses, three power plants, oil contracts and hundreds of traders from Singapore to Houston.
What remains will be a more traditional derivatives and precious metals operation, not unlike what the bank had in the early 1990s, when J.P. Morgan & Co. hired Danny Masters to help break into the ranks of the "Wall Street refiners," banks like Morgan Stanley and Solomon Brothers that were driving growth of the modern oil market. His team became major players in the dynamic European crude market.
"For a year or two, there was nobody bigger than JP Morgan," said one senior industry executive in London.
Around the same time, JPMorgan was building up a large London base metals business, a new area for banks.
None of it would last.
In 1996, J.P. Morgan was named as one of at least four banks caught up in the Sumitomo Corp. copper trading scandal, when rogue trader Yasuo Hamanaka racked up $2.6 billion in unauthorized losses. Morgan, which had loaned money to the Japanese trading firm, was the only bank to be rapped by regulators for lax controls. It wound down the London desk by 1997 to focus on customer business, it said at the time....MORE
