Jon Ruggles

Ruggles was raised in Youngstown, Ohio. He is the son of a former U.S. Army sergeant who became a finance professor at Youngstown State University, and a mother who was an elementary school teacher and an artist.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |year=2014 |isbn=978-1-59184-546-1 |pages=116|publisher=Portfolio/Penguin }} Ruggles attended the University of Michigan at Ann Arbor and the University of Texas at Austin graduating with studies in physics, engineering, and business. He also served in the US Army.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |date=2014 |publisher=Penguin Random House |isbn=978-1-59184-546-1 |location=New York, NY USA |pages=115–116}}

Ruggles began his early career in the energy industry, holding roles at Exxon, ConocoPhillips, and Trafigura before joining consulting firm McKinsey & Company.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |location=New York, NY USA |publication-date=2014 |pages=106}}

In 2011, Ruggles was recruited by Richard Anderson, the then-CEO of Delta Air Lines, to lead an initiative aimed at overhauling Delta's fuel procurement strategy. Anderson envisioned Delta's fuel operations functioning like a commodity trading house and hedge fund rather than a passive price-taker.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |date=2014 |publisher=Penguin Random House |isbn=978-1-59184-546-1 |location=New York, NY USA |pages=107–108}} At the time, Delta was the world's largest fuel-consuming company and faced significant exposure to volatile oil prices.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |location=New York, NY USA |pages=107–111}} Ruggles received a $1 million signing bonus to take on Anderson's difficult task according to Kelly.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |pages=108}}

Ruggles recruited a team of experienced energy and derivatives traders from Wall Street firms to join Epsilon Trading. Delta implemented advanced risk management systems, expanded risk limits, and built a trading desk for more than 20 traders.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |location=New York, NY USA |pages=115}} Delta reported $420 million in derivatives trading profits in 2011 from Ruggles,{{Cite web|url=https://www.sec.gov/Archives/edgar/data/27904/000144530512000272/dal1231201110k.htm|title=DAL 12.31.2011 10K|website=www.sec.gov}}{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |location=New York, NY USA |pages=123}} a stark contrast to previous years where it had lost $80 million up to $1.4 billion annually through its hedging program by relying upon simplistic trading strategies.{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |year=2014 |isbn=978-1-59184-546-1 |publisher=Portfolio |pages=111}} Ruggles funded the bonus pool for 80,000 employees at Delta in 2011 by making a single purely speculative trade in the heating oil market that earned more than $100 million.{{Cite web |date=|type=Delta Letter from the CEO to Employees and Shareholders |title=Delta to Pay $264 Million in Profit Sharing to Employees |url=https://ir.delta.com/news/news-details/2012/Delta-to-Pay-264-Million-in-Profit-Sharing-to-Employees/default.aspx}}{{Cite book |last=Kelly |first=Kate |title=The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders |publisher=Penguin Random House |year=2014 |isbn=978-1-59184-546-1 |location=New York, NY USA}}{{Cite news |title=The Secret Club that Runs the World: Inside the Fraternity of Commodity Traders |url=https://www-ft-com.ezp-prod1.hul.harvard.edu/content/204c04d8-f0d1-11e3-9e26-00144feabdc0 |work=The Financial Times}}

Ruggles created Monroe Energy, acquiring the Trainer Refinery from ConocoPhillips for $180 million and invested over $100 million to bring the idled refinery back online.{{Cite news |title=Delta's risky oil refinery bet |url=https://money.cnn.com/2012/05/01/news/companies/delta-refinery/index.htm |work=CNN - Money Magazine}} Despite initial skepticism from business media, Monroe Energy became a success, with the refinery's earnings reaching a peak of $1.2 billion in 2022.{{Cite news |title=Why Buying A Refinery Could Be A Disaster For Delta Air Lines (Even With JPMorgan's Help) |url=https://www.forbes.com/sites/steveschaefer/2012/04/11/why-buying-a-refinery-could-be-a-disaster-for-delta-air-lines-even-with-jpmorgans-help/ |work=Forbes}}{{Cite news |title=Delta Air Lines' Oil Refinery Just Became Way More Valuable |url=https://finance.yahoo.com/news/delta-air-lines-apos-oil-161400389.html |work=Motley Fool}}{{Cite news |title=Delta Air Lines Bought an Oil Refinery. It Didn't Go as Planned. |url=https://www.nytimes.com/2020/08/10/business/energy-environment/delta-oil-refinery-jet-fuel.html |work=New York Times}}{{Cite news |title=Delta Belatedly Is Facing Up To Its One Big Mistake: Investing In An Oil Refinery |url=https://www.forbes.com/sites/danielreed/2018/09/10/its-no-fun-but-delta-belatedly-is-facing-up-to-its-one-big-mistake-investing-in-an-oil-refinery/ |work=Forbes}}{{Cite news |title=Delta Reaps Fuel Savings From Refinery Ownership |url=https://airlineweekly.skift.com/2022/04/delta-reaps-fuel-savings-from-refinery-ownership/ |work=Airline Weekly}}{{Cite news |title=Delta's Trainer Refinery Softens Blow of Rising Jet Fuel Prices |url=https://delco.today/2022/04/delta-trainer-refinery-jet-fuel/ |work=Delco.Today}}

Ruggles left Delta at the end of 2012, and is now believed to be an owner of the North Atlantic Refinery in Canada.{{Cite news |last=Antle |first=Rob |date=October 6, 2016 |title=Come By Chance refinery director ordered to pay US$5.25M for 'fraudulent' fuel trades at prior job |url=https://www.cbc.ca/news/canada/newfoundland-labrador/jon-ruggles-cftc-energy-trades-order-1.3791178 |work=CBC}}

In 2014, CNBC broke the news that Ruggles was being investigated by the CFTC. In September 2016, Ruggles and the CFTC reached an out-of-court settlement regarding his trading activities during his tenure at Delta Air Lines.{{cite web |url=https://www.cftc.gov/sites/default/files/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfrugglesorder092916.pdf |title=Commodity Futures Trading Commission Vs. Jon P. Ruggles |date=September 29, 2016 |publisher=CFTC }}{{Cite news |title=Delta executive Jon Ruggles fined $3 million in commodities trading scheme |url=https://www.cnbc.com/2016/06/13/delta-executive-jon-ruggles-fined-3-million-dollars-in-commodities-trading-scheme.html |work=CNBC}} Under the terms of the settlement, Ruggles agreed to pay $3 million in fines.{{Cite news |date=June 13, 2016 |title=Delta executive Jon Ruggles fined $3 million in commodities trading scheme |url=https://www.cnbc.com/2016/06/13/delta-executive-jon-ruggles-fined-3-million-dollars-in-commodities-trading-scheme.html |work=CNBC}} Ruggles did not admit to any wrongdoing and was not prosecuted criminally. He agreed to cease trading NYMEX energy futures for an indeterminate period. Delta Air Lines did not pursue any legal action against him.{{Cite news |title=Former Delta executive settles CFTC trading case |url=https://www.cnbc.com/2016/09/29/former-delta-airlines-executive-charged-with-fictitious-non-competitive-trades.html |work=CNBC}}

In the final settlement, Ruggles' wife, Ivonne Ruggles, was not implicated or sanctioned by the CFTC. Although some trades were executed in accounts registered in her name, the CFTC's focus remained solely on Jon Ruggles, with no penalties imposed on her.{{Cite web |title=Satisfaction of Judgement |url=https://www.pacermonitor.com/public/case/37648297/United_States_Of_America_v_Ruggles |website=PACER Monitor}}{{Cite news |title=Former Delta Air Lines Trader Penalized $3.1 Million by NYMEX |url=https://www.bloomberg.com/news/articles/2016-06-13/former-delta-air-lines-trader-penalized-3-1-million-by-nymex |work=Bloomberg}}

The Ruggles case marked a shift in insider trading regulation in commodities markets.{{Cite news |title=CFTC attacks insider trading in futures market |url=https://www.chicagobusiness.com/finance-banking/cftc-attacks-insider-trading-futures-market |work=Cranes - Chicago Business}} Before the Dodd-Frank Act in 2010, the CFTC did not have regulatory power under Commodity Exchange Act (CEA) focusing only on insider misuse by CFTC personnel or individuals in exchanges under its oversight.{{Cite web|url=https://www.cftc.gov/LawRegulation/CommodityExchangeAct/index.htm|title=Commodity Exchange Act & Regulations | CFTC|website=www.cftc.gov}} There were no broad, market-wide prohibitions on insider trading like those enforced by the SEC in securities markets.{{Cite news |title=CFTC Year in Review and a Look Forward |url=https://corpgov.law.harvard.edu/2017/02/04/cftc-year-in-review-and-a-look-forward/ |work=Harvard Law School Review on Corporate Governance}}

Harvard Law School's Forum on Corporate Governance noted:

{{blockquote |"These cases (referring to Ruggles and one other at the time) mark a significant development in CEA enforcement. Historically, “insider trading” was not prohibited by the commodities laws. With the adoption of CEA Section 6(c)(1) and CFTC Regulation 180.1, the Commission now has broad-based authority to bring “insider trading” actions based on deceptive conduct, similar to the Securities and Exchange Commission’s (SEC’s) authority under Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Nonetheless, the differences in trading between futures and securities make it unlikely that insider trading enforcement will become a centerpiece of the CFTC’s enforcement program as it is for the SEC’s."{{Cite news |date=February 4, 2017 |title=CFTC Year in Review and a Look Forward |url=https://corpgov.law.harvard.edu/2017/02/04/cftc-year-in-review-and-a-look-forward/ |work=Harvard Law School Forum on Corporate Governance}}}}

Ruggles' did not admit wrongdoing in his settlement with the CFTC was never prosecuted criminally.{{Cite web |date=March 11, 2021 |title=Insider Trading in Commodities Markets: An Evolving Enforcement Priority |url=https://www.lw.com/admin/upload/SiteAttachments/Alert%202827.v5.pdf |website=Latham & Watkins}} The CFTC's other four test cases contemporary to Ruggles (including Bogucki) relying on Misappropriation Theory have resulted in two out-of-court settlements and two court-room losses. No Misappropriation Theory insider trading cases have been tried by the CFTC since 2019.{{Cite news |date=2019 |title=The Misguided Prosecution of Barclays FX Trader Robert Bogucki |url=https://www.forbes.com/sites/walterpavlo/2019/10/28/the-misguided-prosecution-of-barclays-fx-trader-robert-bogucki/}}{{Cite web |title=Insider Trading in Commodities Markets: An Evolving Enforcement Priority - Number 2827 |url=https://www.lw.com/admin/upload/SiteAttachments/Alert%202827.v5.pdf |website=Latham & Watkins}}

Outside of commodity trading, Ruggles is an accomplished engineer in petroleum refining and renewable energy. He was responsible for re-engineering the Trainer Refinery to increase its yields of kerosene to be the highest jet-fuel yielding refinery in the world with double the jet producing capacity compared to typical refineries {{Cite web |last=Kloza |first=Tom |date=2024-11-21 |title=Delta Says Little About Refinery Operations, Vows to Avoid Fuel Hedges -- OPIS |url=https://www.marketwatch.com/story/delta-says-little-about-refinery-operations-vows-to-avoid-fuel-hedges-opis-030eda54 |access-date=2025-02-13 |website=MarketWatch |language=EN-US}} with a peak production capacity at 32%.{{Cite web |last=Hargreaves |first=Steve |title=Delta's risky oil refinery bet |url=https://money.cnn.com/2012/05/01/news/companies/delta-refinery/index.htm |access-date=2025-02-13 |website=CNN Money}}

The expansion of this jet production in addition to a swap agreement structured by Ruggles with BP and ConocoPhillips enabled the refinery to vertically cover up to 80% of Delta's jet fuel demand:

Monroe Energy is making history by revolutionizing an industry. Focused on shifting its product slate to maximize the production of jet fuel, Monroe obtains crude from various sources and distributes product through pipelines and barges to Delta Air Lines and other strategic partners. Through direct production and exchange agreements, Monroe provides Delta with approximately 80 percent of its domestic jet fuel needs.{{Cite web |title=Why Monroe Energy {{!}} Monroe Energy |url=https://www.monroe-energy.com/who-we-are/why-monroe-energy/#:~:text=Today,%20Monroe%20Energy%20is%20making,its%20domestic%20jet%20fuel%20needs. |access-date=2025-02-13 |website=www.monroe-energy.com}}

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Category:Delta Air Lines people

Category:American business executives

Category:1973 births

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Category:Derivatives (finance)

Category:University of Texas at Austin alumni