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) -- As Wall Street braces for the final Volcker rule, traders have been leaving big investment banks en masse.

The rule, which limits investments in hedge funds and private equity and bans so-called "proprietary trading," has not yet been fully fleshed out. The Financial Stability Oversight Council released a study this week on the regulation, paving the way for regulators to craft final rules, expected by April.

But, in the meantime, every major bank has seen prop traders depart or wrapped them into other divisions - from

JPMorgan Chase's

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commodities traders , to


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heads of long-short equity trading to

Morgan Stanley's

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decision to spin out its

FrontPoint and

PDT Advisers hedge fund trading groups.

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Of all the banks to be hit by Volcker, analysts reckon that

Goldman Sachs

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will be the one to take it on the chin.

The firm has wound down its entire prop trading desk - known as Goldman Sachs Principal Strategies - and is figuring out what to do with other units that may breach the line of what regulators consider "proprietary." Its prop traders are known to be among the best on Wall Street, spawning big hedge funds like Perry Capital, ESL Investments, Farallon Capital, TPG-Axon Capital and the publicly traded hedge-fund firm




Here's a look at some of the key players in the Volcker-Goldman situation, and some hot shot Goldman alums who have successfully branched out on their own:

Former Federal Reserve Chairman Paul Volcker

Volcker has long believed that investment banking and consumer banking should be separate. This view won power when Volcker became a close economic policy adviser to President Obama during the financial reform proceedings. Though he didn't get exactly what he wanted, Section 619 in the Dodd-Frank bill - better known as the "Volcker rule" - prevents federally insured banks from using money from their balance sheet for trading, unless it's in the process of facilitating a client transaction.

Goldman Sachs CEO Lloyd Blankfein

The Volcker rule has left investment banks like Goldman Sachs winding down their most profitable business of proprietary trading, scrambling to figure out what types of trading are still allowed and trying to find ways to make up for lost income. Blankfein, a former trader himself, had been an advocate of Goldman's trading boom since heading various trading divisions in the 1990s. He must now figure out how make the firm as profitable serving clients as it was placing bets in the capital markets.

Bob Howard, managing director, Kohlberg Kravis & Roberts

Howard had been head of Goldman's U.S. prop trading operation. He left the firm in October with a group of nine traders to move to


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asset management division. There, he manages a group focused on long-short equity strategies.

Daniel Och, CEO of Och-Ziff

Och, a former head of prop trading at Goldman, left the firm in 1994 to start Och-Ziff, a hedge fund and private equity shop. Och-Ziff, which now has $27.6 billion of assets under management, went public in 2007.

Eddie Lampert, founder, ESL Investments

Lampert worked in Goldman's risk arbitrage department before launching his hedge fund in 1988.

Thomas Steyer, Founder, Farallon Capital

Steyer was also a trader in Goldman's risk arbitrage department before launching his hedge fund in 1986.

Dinakar Singh, Founder, TPG-Axon Capital

More recently - but before the Volcker rule was a gleam in Congress' eye - traders like Singh have branched out from Goldman as well. Singh was head of Goldman's prop trading group until 2004, when he launched TPG-Axon.

Eric Mindich, founder, Eton Park Capital Management

Mindich was a Goldman trader before launching Eton Park in 2004 with Erland Karlsson. Both worked on Goldman's equities desk.

-- Written by Lauren Tara LaCapra in New York


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