Sitting onstage in Washington’s Ronald Reagan Building in July, Lloyd C. Blankfein said Goldman Sachs Group Inc. had stopped using its own money to make bets on the bank’s behalf.

“We shut off that activity,” the chief executive officer told more than 400 people at a lunch organized by the Economic Club of Washington, D.C., slicing the air with his hand. The bank no longer had proprietary traders who “just put on risks that they wanted” and didn’t interact with clients, he said.

That may come as a surprise to people working in a secretive Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said.

The team’s survival shows how Goldman Sachs has worked around regulations curbing proprietary bets at banks. Former Federal Reserve Chairman Paul A. Volcker singled out the company in 2009, saying it shouldn’t get taxpayer support if it focuses on trading. A section of the 2010 Dodd-Frank Act known as the Volcker rule, drafted to prevent banks from taking on excessive risk, limits short-term investments made with firms’ capital.

The law doesn’t bar longer-term wagers. That leaves room for other risky investments, according to Matthew Richardson, an economics professor at New York University’s Stern School of Business. Bets that last months can go awry and belong outside federally backed banks, he said.

“From a systemic-risk perspective, it’s really the longer- term holdings which are of issue,” said Richardson, who heads NYU’s Salomon Center for the Study of Financial Institutions.

‘The Don’

Michael DuVally, a Goldman Sachs spokesman, said in an e- mail that MSI engages in long-term investing and lending. A 2011 proposal for implementing the Volcker rule uses a 60-day cutoff to classify short-term trades.

“We have made changes to the strategies this business historically has employed to bring them into compliance with our current understanding of the Volcker rule,” said DuVally, who declined to make MSI executives available for interviews. “If the final rule requires additional changes, we’ll make them.”

The team of about a dozen people, based at the firm’s Manhattan headquarters, is headed by Daniel Oneglia and Geoff Adamson. Oneglia was treasurer of the Princeton eating club Tiger Inn, where his nicknames included “the Don” and “the Weasel,” according to the university’s website. Adamson was coxswain for men’s heavyweight varsity crew. A Boston Globe photo shows teammates flinging him into a Massachusetts lake after a victory.