NEW YORK (Reuters) - Francis Dunleavy, who ran the JPMorgan Chase & Co (JPM.N) energy desk in Houston that was accused of manipulating the U.S. power market earlier this year, has retired from the bank after a career of more than 30 years, a spokesman said.
Dunleavy, who headed up a division known as Principal Commodity Investment that used the bank’s own capital to invest in energy-related assets, ran the business for six years after 25 years at Bear Stearns. He left on October 17, the JPMorgan spokesman said.
His departure comes at a tumultuous time for the bank’s commodity team, which months ago agreed to pay $410 million to settle allegations that it manipulated power markets in California and the Midwest between 2010 and 2012.
The U.S. Federal Energy Regulatory Commission (FERC)identified Dunleavy and two members of his team, Andrew Kittell and John Bartholomew, as instigating the alleged strategy, but it did not seek to fine them or press charges. Their lawyers have said they did nothing that broke the law.
Dunleavy, 57, could not be reached for comment. A former colleague said he had been planning to retire for some time. The person did not want to be named because the person was not authorized to speak to the press.
The FERC deal came just days after JPMorgan announced plans to sell or spin off its physical commodity trading desk amid unprecedented regulatory and political scrutiny of U.S. banks’ involvement in physical commodity trading - and a crackdown on the ownership of assets.
Other banks are also seeing senior-level departures, with two of Goldman Sachs Inc’s (GS.N) top commodity executives having left the bank in recent weeks.
Dunleavy’s career spanned more than three decades after he joined Bear Stearns in 1982 and became partner in 1985.
He was considered instrumental in building out the bank’s energy business into a 220-person power and natural gas trading desk in Houston before JPMorgan acquired the bank in 2008.
Buying Bear Stearns helped transform JPMorgan into the biggest oil, power, gas and metals trader on Wall Street as big financial institutions expanded into lucrative physical commodity trading. But JPMorgan, as a regulated bank holding company, was never allowed to own power plants and other commodity assets in the way that Bear Stearns had.
Tighter regulation, high costs and lower price volatility have forced some U.S. banks to curb their activities in the capital-intensive business.
On leaving last month, Dunleavy handed over the reins of the Principal Commodity Investment unit to John Anderson, who is also head of JPMorgan’s power and gas trading, the JPMorgan spokesman said. Anderson had been running the Houston desk jointly with Dunleavy since last year, he said.
His departure was first reported by website SparkSpread.
Reporting by Josephine Mason; Additional reporting by Anna Louie Sussman; Editing by Phil Berlowitz