Report: Goldman Sachs Might Spin Out GSPS Tomorrow

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Other banks would take Friday and enjoy the weekend but not Goldman Sachs, according to CNBC's Kate Kelly. They get shit done before close of business and none of this Summer Friday crap. Of course, there are still a lot of unknowns, a lotta ins, lotta outs, lotta what-have-yous, including but not limited to, will GS seed this entity? Will it act as prime broker and if so, will it be treated like every other client or will it get extra-special treatment, like being told beforehand trades will be front-run ("we're just going to help ourselves to this, thanks sugar")? These are the things we need answers to.

Kelly:

SOUNDS LIKE GOLDMAN SACHS PRINCIPAL STRATEGIES WHICH IS THE EQUITY VERSION OF THEIR PROP TRADING GROUP WHICH IS A GLOBAL OPERATION IN NEW YORK AND LONDON AND HONG KONG AND ELSEWHERE IS GOING SPIN OUT AS EARLY AS TOMORROW. WE SHOULD BE LOOKING FOR A PUBLIC ANNOUNCEMENT AND THEY WILL BECOME ESSENTIALLY AN INDEPENDENT HEDGE FUND. NOW WHATS STILL A LITTLE UNCLEAR IS WHAT WILL GOLDMAN'S RELATIONSHIP BE WITH THE NEW GSPS? WILL THEY PROVIDE SEED CAPITAL? OR WILL IT BE THIRD PARTY INVESTORS? SOME COMBINATION OF BOTH? THERE IS A LOT OF MARKET CHATTER ABOUT THAT.WILL THEY HAVE A PRIME BROKERAGE RELATIONSHIP? IS IT EVEN POSSIBLE THAT GSPS WILL BE IN THE GSAM ENTITY SO TECHNICALLY OWNED, THE MANAGEMENT OWNED BY GOLDMAN BUT MORE OR LESS AN INDEPENDENT ENTITY. THE OTHER ISSUE IS THEIR SPECIAL SITUATIONS GROUP WHICH IS THEIR FIXED INCOMES PROP TRADING GROUP. WHAT'S GOING TO HAPPEN THERE. THERE ARE A COUPLE OF BUSINESSES WITHIN THAT THAT GOLDMAN IM TOLD IS QUITE COMFORTABLE WITH. THEY HAVE A DISTRESSED FINANCING UNIT AS WELL AS MIDDLE-MARKET LENDING GROUP THAT SHOULD BE TOTALLY FINE UNDER THE VOLCKER RULE. HOWEVER THEY DO HAVE PROP TRADERS AND THOSE PEOPLE'S FUTURES A LITTLE UNCERTAIN AND THEYRE STILL FIGURING THAT OUT.

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A week ago today, a man named Greg Smith resigned from Goldman Sachs. As a sort of exit interview, Smith explained his reasons for departing the firm in a New York Times Op-Ed entitled "Why I Am Leaving Goldman Sachs." The equity derivatives VP wrote that Goldman had "veered so far from the place I joined right out of college that I can no longer in good conscience say I identify with what it stands for." Smith went on to note that whereas the Goldman of today is "just about making money," the Goldman he knew as a young pup "revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients." It was a culture that made him "love working for the firm" and its absence had stripped him of "pride and belief" he once held in the place. While claiming that Goldman Sachs has become virtually unrecognizable from the institution founded by Marcus (Goldman) and Samuel (Sachs), which put clients ahead of its own interests, is hardly a new argument, there was something about Smith's words that gave readers a moment's pause. He was so deeply distraught over the differences between the Goldman of 2012 and the Goldman of 2000 (when he was hired) that suggested...more. That he'd seen things. Things that had made an imprint on his soul. Things that he couldn't forget. Things that he held up in his heart for how Goldman should be and things that made it all the more difficult to ignore when it failed to live up to that ideal. Things like this: