Time running out for Goldman and Morgan Stanley to exit funds


U.S. banks got a reprieve last week when the Federal Reserve gave them one more year to comply with a Volcker Rule ban on investing in private equity and hedge funds.

Bloomberg News reports that for Goldman Sachs and Morgan Stanley, now comes the hard part: Exiting billions of dollars of holdings in a short time without selling some at a loss.

The industry has until July 21, 2017, to sever most ties with private funds after the Fed signed off on the last of three 12-month extensions it was permitted to grant under the Dodd-Frank Act. That means the clock is winding down for Goldman Sachs to shed as much as $7.2bn of investments and for Morgan Stanley to unload as much as $3.4bn. Regulatory filings for other big banks don’t provide as much detail on investments they might have to exit to satisfy Volcker.

“For the most part, there isn’t a sense of panic,” said Kevin Petrasic, who runs the financial-services practice at White & Case and has been advising banks on complying with the prohibition on private funds. “There’s more sort of a sense of inevitability.”

To access the complete Bloomberg News article hit the link below:

Time Short for Goldman, Morgan Stanley to Exit Billions in Funds

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