Goldman Hedge Fund Can Keep Bank Stake, Fed Says

Mar 15 2011 | 2:49am ET

Goldman Sachs will be allowed to keep its stake in a Tennessee bank because it is held by a bank-owned hedge fund.

The Federal Reserve has approved Goldman's application to keep its nearly 10% voting stake in Avenue Financial Holdings, which is actually held by hedge fund Goldman Sachs Investment Partners. The Fed's okay is needed for a bank holding company to own more than 5% of the voting shares of a bank, and Avenue Financial owns Avenue Bank.

The regulator noted that the Avenue stake is held by a Goldman hedge fund, which made the purchase before Goldman became a bank holding company in September 2008, as a passive investment. According to the Fed, Goldman has promised to keep it that way.

"Goldman has committed not to exercise or attempt to exercise a controlling influence over the management or policies of Avenue or any of its subsidiaries," the central bank said in a statement. The approval "is specifically conditioned on compliance by Goldman with the conditions imposed in this order and the commitments made to the Board in connection with the application."

Avenue received $7.4 million in federal bailout money and has yet to repay it.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

FATCA for Hedge Funds: Eight Common Pitfalls

Sep 1 2015 | 10:56am ET

FATCA is now a way of life for those in the financial industry and most professionals...

 

Editor's Note