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What's Next for Goldman's Ruzika?

Richard Ruzika
Source: columbia.edu
Richard Ruzika

News broke on Friday that Richard Ruzika, head of Goldman Sachs' Special Situations Group was 'retiring'.

At 51, Ruzika, a former precious metals commodities trader, seems a bit young to spend his days ambling along on a golf course.

Which may make you wonder: What's the story behind the scenes at Goldman Sachs?

Dealbook calls Goldman's cryptic sounding Special Situations Group an "elite division that invests in and lends to companies," and goes on to say the group is "well known for its typically profitably deal [sic.] on everything from Japanese golf courses to Texas wind-power companies."

On Friday, Dealbook published an internal memo circulated at Goldman describing Ruzika's tenure at the firm: "…Rich has upheld the high standards of teamwork and integrity which exemplify the firm's culture. He has promoted these values across Goldman Sachs, and mentored successive generations of leaders across our business. Please join us in thanking Rich for his many contributions to Goldman Sachs and in wishing him and his family all the best in the years ahead."

It certainly sounds like an amicable split.

Since Ruzika is only 51, and very much at the top of his game, it seems unlikely that he's about to trade running a hugely profitable division at Goldman Sachs for a deck chair anytime soon.

So what's going on here?

For some insight, let's turn to a Wall Street Journal article from August of 2010. The article begins: "It's slim-down time for Wall Street firms facing curbs on some of their businesses under the financial-regulation overhaul passed by Congress last month." It makes some observations about prop trading on Wall Street—and then, specific to Goldman, observes: "Analysts say Goldman is likely to shut its famed proprietary-trading unit, known as Goldman Sachs Principal Strategies."

Which is exactly what happened a month later.

The WSJ article continues: "Goldman is more protective of a much larger proprietary-trading operation called the Special Situations Group, a debt-securities specialist. Mr. Horowitz estimates the unit has about $10 billion in assets, jolting the company's overall profits occasionally. In 2006, Goldman made $500 million in one quarter from selling a stake in a Japanese golf company held by the trading unit. Goldman has no plans to unwind or unload the Special Situations Group, said a person familiar with the matter."

So what does it add up to?

Perhaps Goldman Sachs is playing a perceptions game.

It may be divesting itself—at least directly—of units that might appear to be associated with proprietary trading.

But let's not forget: Goldman is well known for maintaining key relationships with its most productive former employees.

And a man like Ruzika would certainly fit that bill.

Place your bets now on whether—or in what form—Ruzika may return to Goldman.

As a former Bear Stearns executive name Michael Driscoll observes in the Journal article: "Goldman Sachs is a money-making machine, and if there is a component to the machine that is making money, they'll find a way to keep it alive."

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