Goldman Sachs trader made $130m on junk bonds

A junk bond trader at Goldman Sachs Group earned more than $US100 million ($130m) in trading profits for the firm earlier this year, an unusual gain at a time when new regulations have pushed Wall Street to take fewer risks.

The gains were the work of Tom Malafronte, a managing director on the bank’s high-yield bond desk in New York. The 34-year-old trader bought billions of dollars in junk corporate debt on the cheap starting in January, then locked in profits as prices recovered.

The windfall is a throwback to a previous era, when big banks were more eager to step in as markets turned and bond traders took bigger risks. Those bets have become less common since the crisis. Hoping to make the financial system safer, Congress passed rules that curbed banks’ ability to wager with their own money and required them to hold more capital.

Link: Wall Street Journal Goldman Sachs trader made $130m on junk bonds