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BREAKING NEWS FROM CNBC'S KATE KELLY: GOLDMAN SACHS TO SPIN OUT PROP TRADING

WHEN: Today, Wednesday, August 4th at 12:00PM ET

WHERE: CNBC's "The Strategy Session"

Unofficial transcript below. All references must be sourced to CNBC.

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BECKY QUICK: LARRY THANK YOU VERY MUCH. IM BECKY QUICK. IM IN FOR DAVID FABER. GARY KAMINSKY IS HERE AS WELL. WE ARE GOING TO START THINGS OFF WITH A BANG TODAY. KATE KELLY HAS SOME BREAKING NEWS ON GOLDMAN. KATE, LETS GET RIGHT TO IT.

KATE KELLY: THANKS BECKY. SO IM HEARING THIS MORNING THAT GOLDMAN SACHS IS SERIOUSLY CONSIDERING SPINNING OFF ITS PROPRIETARY TRADING UNIT OR A SIGNIFICANT PORTION OF IT AS EARLY AS THIS MONTH. THEY WILL TAKE THAT UNIT OUT OF THE MAJOR BANK AND PUT IT INTO ANOTHER ENTITY. NOW DETAILS ARE NOT ENTIRELY CLEAR. THERE ARE A COUPLE OF OPTIONS ON THE TABLE. ONE THING THAT GOLDMAN AND OTHER BANKS ARE CONSIDERING AND OF COURSE THIS IS ALL MOTIVATED BY THE VOLCKER RULE WHICH IS THE ASPECT OF FINANCIAL REGULATION THAT COULD BE YEARS IN THIS SORT OF IMPLEMENTATION BUT PEOPLE ARE PLANNING FOR RIGHT NOW. ONE SCENARIO IS TO SEED A HEDGE FUND STAFFED BY FORMER GOLDMAN SACHS PROPRIETARY TRADERS WITH GOLDMAN MONEY AND REPLACE IT IN THE COMING YEARS WITH THIRD PARTY MONEY AS THE VOLCKER RULE IS IMPLEMENTED BECAUSE PEOPLE THINK THAT COULD BE YEARS OUT. ANOTHER POSSIBILITY IS TO POTENTIALLY MOVE IT INTO THEIR ASSET MANAGEMENT UNIT AND OWN THE MANAGEMENT BUT NOT SEED IT WITH GOLDMAN MONEY. THATS ANOTHER WAY TO INTREPRET THE RULES. SO THEY ARE LOOKING AT A FEW DIFFERENT THINGS. THEY ALSO MIGHT BE MOVING SOME PEOPLE AROUND IN EUROPE FROM LONDON TO ZURICH WHERE THEY HAVE LEASED SOME OFFICE SPACE SO THEY ARE PLAYING WITH A BUNCH OF DIFFERENT SCENARIOS TO DEAL WITH THE TAX SITUATION IN THE UK AS WELL AS THE VOLCKER RULE IN THE US.

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