Energy Risk
11 December 2006
New York
Head gas trader quits JPMorgan

The head natural gas trader for JPMorgan has resigned after being asked to leave the investment bank, sources close to the situation said Friday.

JPMorgan spokesman Brian Marchiony confirmed that Parker Drew, who joined the bank in 2005 after the collapse of his hedge fund Enchanted Rock, had left. Giving no further comment as to why, Marchiony added that no decision has yet been made on a replacement.

Speculation was rife that Drew’s exit may have had something to do with JPMorgan’s role as the clearing firm for energy traders at Amaranth Advisors, the $9.2billion hedge fund that collapsed in September due to heavy losses sustained from natural gas bets gone awry. The bank bought Amaranth’s contracts as the fund struggled to unwind its considerable positions in order to return money to investors.

Other theories behind Drew’s departure suggested that the bank may have lost sizeable amounts trading carbon emissions credits this year.

However, a source close to the situation and who wishes to remain anonymous believes that the exit was due to far less dramatic circumstances, saying that events were triggered by disagreements about performance and end of year bonus expectations.

“There have been no large losses, it has nothing to do with the Amaranth positions,” the source said. “Many guys who exit collapsed hedge funds for banks start off contrite and want to focus, but before long a bank environment becomes very limiting in terms of the risk you’re allowed to take.”

The source said that while Drew is a widely respected trader, the disagreement may have stemmed from him seeking more risk in the natural gas space than the bank was willing to allow.

“The bank may not have been happy with his performance,” the source added, “but his response would be, ‘well, my performance is like this because you won’t let me take any risk’. It’s the classic argument.”