Goldman Sachs Group Inc. (NYSE: GS) is losing a star manager. It has recently been reported that Morgan Sze is trying to raise more than $1 billion to start his own hedge fund.
The effort, which if successful would mark the largest hedge fund launch since the credit crisis, could be an important indicator into market direction for 2011. Confidence is slowly returning to the market, and an inflow of capital currently on the sidelines can fuel sustained growth.
Since the Dodd-Frank Congressional Finance Reform legislation was passed, banks have been furiously changing the models of the trading desks. In doing so, there has been a brain drain, seeing many successful traders move towards the doors and starting their own firms in the process. As noted by Reuters, proprietary trading desks are being closed as stiffer regulations, (i.e., the “Volker Rule”), make it more difficult for banks to engage in more speculative investment strategies.
At the same time, J.P. Morgan (NYSE: JPM) is moving its proprietary traders to the asset management unit, according to Reuters. Sources told the newswire that Sze is Goldman’s highest-paid trader and earned a bonus of almost $100 million in 2006.
