One junk-bond trader at
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
The windfall is a throwback to a previous era on Wall Street, 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
Wall Street responded by
As a market maker, Mr. Malafronte bought the bonds from clients anxious to sell them and ultimately lined up other investors to buy them—at a higher price. Goldman profited from the difference, people familiar with the matter said.
It is difficult—if not impossible—to define clearly the difference between trades made to meet clients’ demands and those conducted just to make money, said Hal Scott, a professor with Harvard Law School who has testified before Congress about efforts to regulate the banking industry.
“No one has been able to distinguish between market making...