Goldman Sachs Group Inc. (GS-D) is shutting down its principal strategies unit, as the company seeks to better comply with U.S. regulations that discourage excessive risk-taking by investment banks, Bloomberg News reported, citing two unnamed sources familiar with the process.
The shut-down will affect about 70 people who work in Goldman Sachs offices worldwide, the wire service reported. The group, led by Hong Kong-based Morgan Sze, engaged in proprietary trading, in which a firm makes trades that put its own capital at risk. Goldman's principal strategies unit had planned to form its own hedge fund, but that process was scrapped, Bloomberg reported.
Goldman Sachs, along with competing investment banks, is working to comply with U.S. regulations that prohibit banks from betting on their own accounts with their own capital, Bloomberg reported. JPMorgan Chase & Co. also plans to shut down its proprietary-trading divisions, the wire service said, adding that about 10% of Goldman Sachs' revenue comes from proprietary trading.
Goldman Sachs spokesman Ed Canaday declined to comment to Bloomberg News. Canaday, when reached by AOL Daily Finance, would neither comment on the report nor confirm it.