Goldman Sachs Risk Arbitrage

As U.S. Secretary of the Treasury, Bob Rubin helped guide the U.S. economy from a massive $255 billion deficit to a $70 billion surplus. But he also trained a group of investors who went on to become a major lineage in the hedge fund industry.

In the 1960s, Bob Rubin, a former lawyer, joined a small, intense corner of Goldman Sachs known as the Risk Arbitrage Department. With its acute focus on probability and the art of managing risk, his risk arbitrage desk became one of the most famed places to work at Goldman Sachs by the 1980s.

Over the next two decades, the alumni of that desk would go on to shape the modern hedge fund industry.

• Tom Steyer founded Farallon.
• Eric Mindich, the youngest partner in Goldman Sachs history, founded Eton Park.
• Richard Perry, nephew of Bear Stearns CEO Jimmy Cayne and boss of future hedge fund legend Chris Hohn, founded Perry Capital.
• Daniel Och was seeded by the Ziff brothers to found Och-Ziff.
• Frank Brosens, who later led GS risk arb, founded Taconic.
• Dinakar Singh, who led GS Principal Strategies, the successor to GS risk arb and the firm's in-house prop trading unit, founded TPG-Axon.

At their peaks, these legends collectively managed well over $100 billion and influenced everything from event-driven investing to political policy.

They came from different backgrounds — engineers, lawyers, economists — but all absorbed the same gospel: control the downside and do the fundamental work.

This article traces the story of that lineage, from Rubin's own rise at Goldman Sachs to the ascent, triumphs, and stumbles of his protégés across decades of market cycles.

Let’s dive in.