Goldman Sachs 'planning to close principal strategies unit'

6 September 2010

Goldman Sachs is set to shut its principal strategies unit in light of the new regulations contained within the Dodd-Frank Act.

Inside sources told Bloomberg that new rules aimed at curbing risk have prompted Goldman Sachs' to close down the division, which uses the investment bank's own money to make bets.

An official announcement on the closure is being held off while the 65 to 70 people who work in the division are given new roles, it was reported.

Goldman Sachs currently makes around ten per cent of its revenue from proprietary trading, but the Dodd-Frank Act is to stop investment banks from making bets with their own capital.

Last week, the Financial Times reported that JPMorgan is set to shut its commodities unit in the wake of the legislation and is also looking into closing its equity and fixed-income proprietary trading units in the near future.

A similar move is also said to be under discussion at Morgan Stanley.

By Gary Cooper

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