In his effort to cut Merrill Lynch’s hedge fund investments, John Thain is bidding farewell to one of his firm’s top traders.

Boris Ehsani is leaving Merrill after the Wall Street giant shelved plans to spin off his principal credit group as an independent hedge fund. Ehsani, who has worked at Merrill for 23 years, will instead go at it alone, setting up his own hedge fund shop with backing from other investors, Bloomberg News reports.

The principal credit group manages more than $2.8 billion and has been among Merrill’s best-performing groups. While Merrill’s overall revenue plummeted 67% last year, principal credit’s revenues soared 62%. The group invests in out-of-favor equities and private companies planning to go public.

As recently as last month, Merrill sales materials indicated that principal credit would create an independent hedge fund in which Merrill would be a significant investor. Merrill was reportedly prepared to seed it with at least $500 million, after developing plans for the fund for more than two years.

Ehsani’s top deputy, Mark Devonshire, also plans to leave Merrill and may join Ehsani’s hedge fund.

Meanwhile, what’s left of the currently 30-strong principal credit group will be merged with a distressed-debt team. The latter group lost its leader, Graham Goldsmith, to hedge fund Strategic Value Partners in February.