Goldman Traders to Set Up Fund in London

Two traders on Goldman Sachs’s proprietary trading desk are poised to set up their own fund in London, financed by a major European backer, a person with direct knowledge of the matter said on Monday.

NYSE Traders
Oliver Quilla for
NYSE Traders

Daniele Benatoff and Ariel Roskis, part of the principal strategies desk at Goldman , have struck a deal with Brummer & Partners of Sweden, the person said, asking to remain anonymous because he was not authorized to speak to the media.

Brummer is one of the largest hedge funds in Europe, with $10 billion in assets under management, and will take an ownership stake in the new fund in return for $300 million.

Their departure, first reported in The Financial Times, is part of a larger exodus of traders from Goldman and its rivals as the regulations in the Dodd-Frank financial overhaul, which Congress approved in the summer, put pressure on banks to take fewer risks with their own money.

One of the provisions of the bill, known as the Volcker Rule, prohibits banks from making proprietary trades using their own capital, and Goldman is in the process of closing its proprietary trading desk.

Since the passage of the legislation, Goldman has seen its nine-person team led by Bob Howard migrate to the private equity firm Kohlberg Kravis Roberts to continue its operations.

Another of the bank’s senior traders, Morgan Sze, the global head of the proprietary trading desk, is set to establish a fund called Azentus Capital, which will be based in Asia.

The event-driven fund to be established by Mr. Benatoff and Mr. Roskis next quarter will be jointly owned by its managers and the Brummer partners, as is the case with other funds of the firm.

This investment is the third major move in the past year by Brummer.

Last month it announced the creation of Orvent, an event-driven fund based in Singapore that started operations at the beginning of the year, focusing on Asia-Pacific corporate shares that may be mispriced.

And in January 2010, Brummer introduced the Observatory credit markets fund, which focuses on corporate loans.