Goldman Sachs Group Inc. reportedly is shutting its principal-strategies business, a group that makes bets with the firm’s own capital, to comply with new U.S. rules aimed at curbing risk.  While a spokesperson for the firm declined to comment on the report, it's understood that Wall Street’s most profitable investment bank will hold off making an announcement while 65-70 global unit staffers seek new jobs.  Some traders and support staff may get roles within the firm, while a team in Asia may raise money for a new hedge fund. 

Goldman Sachs, which says about 10% of its revenue comes from proprietary trading, is grappling with a provision of the Dodd-Frank Reform Act that prohibits banks from risking capital by betting for their own accounts.  JPMorgan Chase plans to close its prop-trading units in response to the law;  last month, they told in-house commodities traders in London that they may lose their jobs.  Dodd-Frank allows banks at least 4 years to bring their proprietary trading activity into compliance, with a potential extension of as many as 3 years, according to a timeline prepared by Davis Polk & Wardwell LLP. 

    Goldman Sachs Principal Strategies.   This unit is housed within the firm’s equities division and traces its roots to the risk arbitrage team once led by Robert Rubin, who later became U.S. Treasury Secretary.  In 2007, about half the members of the Principal Strategies team, led by Raanan Agus, created a fund called "Goldman Sachs Investment Partners" that remains housed in the firm’s money-management division.  Some traders who stayed in the principal-strategies unit, including former global head Pierre-Henri Flamand and Ali Hedayat, left Goldman Sachs earlier this year to set up a London-based hedge fund called Edoma Capital Partners LLP.  [Bloomberg, 9/3]