MSI, which stayed open, started in the late 1990s as Special Situations Investing. It became part of SSG in 2003, when Mark McGoldrick, a former Goldman Sachs partner, combined proprietary units into one global business. He left four years later, disappointed by a $70 million bonus, the Wall Street Journal reported.
The bank’s proprietary stock holdings were so large that markdowns on stakes in Asia helped wipe out revenue from client work there in 2011, according to data compiled by Bloomberg.
Clients First
“It’s been shut down,” Viniar, 57, said of the firm’s proprietary-trading business at the Credit Suisse Financial Services Forum on Feb. 9, 2011. “Whatever effects there have been, you’ve seen them already.”
Nine days later, the Special Situations Group posted a Hong Kong job listing seeking a person skilled in equities, loans and bonds. The job “mainly consists of valuing companies and their associated securities,” according to the posting.
Cajide, who left SSG in 2008, called it a “very hush- hush” division because it wagers the firm’s capital.
“You don’t talk about what you’re doing,” she said. “It’s Goldman’s money, right?”
The page on the bank’s website that describes businesses inside SSG, including specialty lending and alternative energy, doesn’t mention Multi-Strategy Investing.
After the Securities and Exchange Commission accused Goldman Sachs in 2010 of defrauding clients in the sale of collateralized debt obligations and before the company settled for a record $550 million, the firm created a committee to review its business practices. The group reiterated the company’s late-1970s principles that said clients come first.
‘More Prop’