On returning to run the firm in 2005, after the ejection of the risk-averse Philip Purcell, he declared that it was under-leveraged and needed to push into mortgages, proprietary trading and private equity.

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Mr Esteves counters that principal investments, including proprietary trading and private-equity activity are only 15-20% of income, although this is still quite high by the newly chaste standards of Western firms.

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That would apply to owning hedge funds, owning private equity funds, and proprietary trading that is not for any client-related business.

WHITEHOUSE: Press Briefing

Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers.

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Unlike other financial reform that curb activities, the Volcker Rule prohibits federally insured banks from engaging in specific business lines: proprietary trading and investment in hedge funds and private equity funds.

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The rule would restrict banks from trading with their own capital, known as proprietary trading, and investing in hedge funds and private equity.

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He said president Obama was not talking of a full-scale break-up of the banks but wanted to "separate retail deposit-taking from large-scale proprietary trading, large internal hedge funds and large internal private equity funds and I agree with him".

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To limit future risk assumed by financial intermediaries, new regulatory reforms are imposing greater checks on proprietary investments, particularly in structured products, hedge funds and private equity funds.

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