Another proprietary trading desk has separated from its parent bank thanks to financial reform.
As previously reported (after a fashion), it now looks as though Goldman Sachs’ Principal Strategies proprietary trading unit has found a new home with publicly traded private equity giant Kohlberg Kravis & Roberts.
The move follows the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which seeks to prevent banks from trading with their own capital and to limit banks’ investments in hedge funds. The change has prompted Goldman and other major bank holding companies like JPMorgan Chase, Citigroup and Bank of America to scale back prop trading operations.
Just yesterday, Morgan Stanley undertook a similar move by offloading its FrontPoint Partners hedge fund business.
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