Report: Goldman Prop. Desk Spin-Off Unlikely

Aug 6 2010 | 3:11am ET

The future of Goldman Sachs’ chief proprietary trading business is set to be announced today, but the Wall Street giant may not be spinning off the desk, after all.

Transforming Goldman Sachs Principal Strategies into an independent hedge fund is the least attractive of the three options the firm is considering, Dow Jones Newswires reports. Despite reports that a spin-off is exactly what Goldman was considering, a source tells Dow Jones that a spin-off isn’t likely.

GSIP may still become a hedge fund—but an in-house hedge fund. Another option Goldman is considering is moving the desk into its asset management business, where it would have to raise outside capital. Under the recently-passed Volcker rule, banks will be barred from proprietary trading, but will be allowed to invest up to 3% of their capital in hedge funds and private equity funds.

Goldman may also choose to simply shut the desk, Dow Jones reports. But whichever of the three options it chooses, the fact that Goldman is doing anything is music to Sen. Christopher Dodd’s ears.

The retiring Connecticut Democrat shepherded the financial regulation reform law through the Senate, and said he is pleased that Goldman is turning away from its hedge fund tendencies.

“It sounds clearly like this is a reaction,” Dodd told Bloomberg News. “I’m glad to hear it. Nothing I’d like to see more than Goldman Sachs become Goldman Sachs again, instead of the hedge fund that it had become.”


In Depth

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...