Goldman Sachs Sells $285 Million in Hedge Fund Holdings
Goldman Sachs is continuing to sell off its hedge fund holdings, including $285 million during the third quarter of this year, as the start date for the Volcker Rule draws closer.
The Volcker Rule, part of the 2010 Dodd-Frank financial overhaul, bars banks from several types of investing and trading with their own money, the sort of work that has long been a big profit-maker for Goldman. The firm must divest of certain types of funds by July 2015 to comply with the rule.
The bank began closing its so-called proprietary trading desks in 2010. More recently, the bank has been jettisoning its investments in hedge funds that it operates. The Volcker Rule prohibits banks from supplying more than 3 percent of the money for its own hedge funds.
In a filing on Wednesday, Goldman said it had already sold $2.55 billion it had in hedge funds, and had immediate plans to get rid of $375 million more. It still has, at last count, about $11.4 billion in funds that are subject to the Volcker Rule.
The bank warned in its filing on Wednesday that it could be hard to unload some of its remaining investments, which are more illiquid.
'To the extent that the underlying investments of particular funds are not sold, we may be required to sell our investments in such funds,' the filing said. 'If that occurs, we may receive a value for our investments that is less than the then carrying value as there could be a limited secondary market for these investments and we may be unable to sell them in orderly transactions.'
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