Robert Mnuchin, Goldman Sachs Block Trading Pioneer, Dies at 92

(Bloomberg) -- Robert Mnuchin, a pioneer of block trading during a 33-year career at Goldman, Sachs & Co. who had a second career as a prominent art dealer and whose son served as US Treasury secretary during the first term of President Donald Trump, has died. He was 92.

He died on Friday at his home in Bridgewater, Connnecticut, the New York Times reported, citing his stepdaughter, Lisa Hedley Wick.

With Gus Levy, senior partner from 1969 to 1976, Mnuchin made Goldman Sachs an innovator in moving huge blocks of securities — often hundreds of thousands of shares in a single company — in a single transaction, matching buyers and sellers in a way that didn’t disrupt the market. When necessary, that meant using the firm’s own account as a bridge. 

This practice, known as block trading, became a key tool in serving the needs of the large institutional clients — pension funds, insurance companies and mutual funds — that began dominating markets in the 1960s.

Trading such large positions of stock took guts and money, and few firms had both, Mnuchin told the Wall Street Journal in 1971. When the New York Stock Exchange instituted a rule that year requiring a negotiated commission on trades involving $500,000 or more, Mnuchin made the first such transaction.

Goldman Sachs became one of the canniest practitioners of large trades, and Mnuchin became the “acknowledged dean of block traders,” the Journal wrote in 1978. His hands-on management style earned him the nickname “Coach.”

The huge transaction “that confirmed Goldman Sach’s leadership in block trading” began with a phone call to Mnuchin in January 1976, Charles D. Ellis wrote in his 2008 book, The Partnership: The Making of Goldman Sachs.

On the line was the head of New York City’s pension fund, who wanted the firm’s help in selling off an entire $500 million portfolio of common stocks and replacing it with a new lineup of stocks indexed to the overall market. The firm “would have to bid a single price to buy the whole portfolio and create the exact new portfolio the city’s pension fund manager specified — and to do so not as an agent, but as an ‘at risk’ principal,” Ellis wrote.

Code Name

To keep competitors from trading ahead of Goldman’s moves, which would make them more expensive, secrecy was key. The five-week effort was given a code name, Operation Eagle. “Small blocks of at least some holdings were sold every day,” Mnuchin told Ellis, “but for each particular stock, the firm was active one day and then quiet for two or three days. One block of 330,000 shares was sold in 78 separate lots of 100 to 13,000 shares.” 

“In mid-March, New York City’s pension fund announced that Goldman Sachs had secretly finished executing the largest-ever purchase and sale of stocks,” Ellis wrote. “The final cost to the New York City pension system for transactions totaling $1 billion was only $2.9 million — less than one-third of 1% — for the largest and one of the most complicated trades in history.”

Mnuchin’s two sons, Steven and Alan, both went into finance and worked at Goldman. In 2016, Steven Mnuchin signed on as national finance chairman for Trump just as he was clinching the Republican nomination for president. After Trump defeated Hillary Clinton to win the White House, he named Steven to lead the Treasury Department. 

As news stories pointed out, it was an unlikely pairing, in part because Robert Mnuchin was a lifelong Democrat who had contributed to candidates including Clinton.

Robert Elliot Mnuchin was born on Sept. 5, 1933, in New York. His parents were Leon Mnuchin, an attorney who co-founded the East Hampton Yacht Club on eastern Long Island, and the former Harriet Gevirtz. The family moved to Scarsdale, New York, when Mnuchin was in elementary school.

In 1955, he received a bachelor’s degree from Yale University. Mnuchin served as what he called the “least decorated private in the Army,” before joining Goldman Sachs in 1957 as a trainee in the firm’s equity department. 

Also in 1957, Mnuchin married the former Elaine Terner. That marriage, which produced Steven and Alan, would end in divorce. In 1964, he married the former Adriana Abelow. They had two daughters, Lisa and Valerie.

General Partner

At Goldman, Mnuchin worked his way up to general partner and in 1976 became co-head of trading and arbitrage. In 1980 he was named to the management committee. The firm became Goldman Sachs Group Inc. when it went public in 1999.

In 1990, soon after retiring from Goldman, Mnuchin and his wife, Adriana, purchased the Mayflower Inn in Washington, Connecticut, a luxury hotel and spa they renovated with 19th century antiques. In 2007, they sold the site, later renamed the Mayflower Grace.

Like his parents, Mnuchin was an art collector. After leaving Wall Street, he turned a hobby into a profession, opening a gallery on New York’s Upper East Side where he exhibited post-World War II masters such as Willem de Kooning, Jackson Pollock and Frank Stella. He ran L&M Arts with his partner, Dominique Levy, a former director of international sales at Christie’s. 

On behalf of a client in 2012, Mnuchin paid $75 million for a Mark Rothko painting at a Sotheby’s auction. 

“The single biggest difference between being a block trader and running the gallery was that on Wall Street we were simply providing liquidity for clients -— we were not advising them on what to buy, we were not advising them on what to sell,” Mnuchin said, according to a 2015 article in Artspace magazine.

He spent the past “quarter century putting on shows of mostly American art that brim with intelligence, historical savvy, and the kind of quality that one tends to find a few blocks to the west, at the Metropolitan Museum of Art,” according to Artspace.

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