James E. Staley, the JPMorgan Chase ($52.99 0.7%) executive once seen as a candidate to become chief executive officer, quit to join BlueMountain Capital Management, the $12 billion hedge fund that profited from the bank’s trading loss last year.

Staley, who was at JPMorgan for more than 34 years, will become a managing partner and purchase a stake in BlueMountain, the New York-based firm said today.

The former investment banking chief, Staley last year handed off day-to-day management duties and became chairman of the corporate and investment bank in a series of executive changes as JPMorgan grappled with wrongway bets in its chief investment office in London.