Investment banks have been trying for years to keep their top traders from defecting to hedge funds, but this might be the most extreme reprecussion for a hedge fund stealing its employees we’ve seen.
Dealbook: A cold war appears to have broken out between JPMorgan Chase and Citadel Investment Group, as the giant Chicago hedge fund poaches trading staff from the banking colossus amid the credit crisis.
JPMorgan has told its traders to suspend counterparty trading with Citadel, a person briefed on the matter told DealBook on Thursday, because the hedge fund’s hiring spree violated employment contracts between the traders and JPMorgan.
According to Breakingviews, which first reported the story, relations between the two firs began to sour in March when Patrik Edsparr left PMorgan to run Europe and fixed income for Citadel.
The final straw came when Citadel lured away Greg Boester, who specialises in trading adjustable-rate-mortgage securities, this person said. After the defection of Mr. Boester, a JPMorgan vice president and a former U.S. Olympic ski team member, JPMorgan investment banking executives decided to halt counterparty trading, though it will still clear and settle trades for Citadel.
Let that be a lesson to you, hedge funds on hiring sprees. Be careful who you employ or you might lose a client!
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