New York (HedgeCo.Net) – In order to comply with rules implementing the new Volcker regulations, Goldman Sachs announced the sale of all liquid hedge fund assets.
The WSJ reports: In a filing on Wednesday, Goldman said it had sold $2.55 billion it had in hedge funds, and had immediate plans to get rid of $375 million more. It still has, at last count, about $11.4 billion in funds that are subject to the Volcker Rule.”
Lloyd Blankfein, CEO of the investment giant, indicated that clients will continue to demand some services prohibited under Volcker and while Goldman Sachs would still be permitted to co-invest with and provide liquidity to its investors, key businesses would no longer be as attractive as they once were.
The Volcker Rule is a specific section of the Dodd–Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict banks from making certain kinds of speculative investments that do not benefit their customers.
Volcker argued that such speculative activity played a key role in the financial crisis of 2007–2010. The rule is often referred to as a ban on proprietary trading by commercial banks, whereby deposits are used to trade on the bank’s own accounts, although a number of exceptions to this ban were included in the Dodd-Frank law.
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