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

(Bloomberg) — Robert Mnuchin, who pioneered block trading during a 33-year career at Goldman, Sachs & Co., had a second career as a prominent art dealer and served as U.S. Treasury secretary during his son President Donald Trump’s first term, has died. He was 92 years old.

According to the New York Times, citing his stepdaughter Lisa Hedley Wick, he died on Friday at his home in Bridgewater, Connecticut.

Along with Gus Levy, who was senior partner from 1969 to 1976, Mnuchin turned Goldman Sachs into an innovator in matching buyers and sellers without disrupting the market by moving large blocks of securities — often hundreds of thousands of shares in a single company — in a single transaction. When necessary, this meant using the firm’s own account as a bridge.

This practice, known as block trading, became an important tool in meeting the needs of large institutional clients (pension funds, insurance companies, and investment funds) that began to dominate the markets in the 1960s.

Mnuchin told the Wall Street Journal in 1971 that trading such large stock positions required courage and money, and few firms had both. When the New York Stock Exchange introduced a rule that year requiring a negotiated commission on transactions involving $500,000 or more, Mnuchin made the first such transaction.

The Journal wrote in 1978 that Goldman Sachs had become one of the most skilled practitioners of big trading and that Mnuchin was “the reputed dean of block traders.” His hands-on management style earned him the nickname “Coach”.

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

There was even the president of a New York City pension fund who asked the firm for help in selling its entire $500 million common stock portfolio and replacing it with a new series of stocks indexed to the broad market. The company “will be required to make a single bid to purchase the entire portfolio and build exactly the new portfolio specified by the city’s pension fund manager, and to do so as an ‘at-risk’ principal, not as an agent,” Ellis wrote.

Secrecy was crucial to prevent rivals from trading ahead of Goldman’s moves, making them more expensive. The five-week effort was codenamed Operation Eagle. “Small blocks of at least some shares were being sold each day,” Mnuchin told Ellis, “but for each stock, the company was active one day and then quiet for two or three days. A block of 330,000 shares was sold in 78 individual lots of 100 to 13,000 shares.”

“In mid-March, New York City’s pension fund announced that Goldman Sachs had secretly completed its largest stock transaction ever,” Ellis wrote. “For one of the largest and most complex trades in history, the final cost to the New York City pension system of transactions totaling $1 billion was only $2.9 million—less than one-third of 1%.”

Mnuchin’s two sons, Steven and Alan, entered the finance industry and worked at Goldman. In 2016, Steven Mnuchin signed on for Trump as national finance chairman as he clinched the Republican presidential nomination. Trump appointed Steven to head the Treasury Department after defeating Hillary Clinton to win the White House.

This was an unlikely pairing, as news stories pointed out; That’s partly because Robert Mnuchin is a lifelong Democrat who has contributed to candidates including Clinton.

Robert Elliot Mnuchin was born on September 5, 1933 in New York. His parents were attorney Leon Mnuchin, 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 grade school.

He received his bachelor’s degree from Yale University in 1955. Before joining Goldman Sachs in 1957 as an intern in the firm’s equity department, Mnuchin served as what he described as “the most underdecorated private in the Army.”

Also in 1957, Mnuchin married the former Elaine Terner. This marriage, from which Steven and Alan emerged, would end in divorce. He married the former Adriana Abelow in 1964. They had two daughters, Lisa and Valerie.

Mnuchin rose to general partner at Goldman and became co-head of trading and arbitrage in 1976. He was elected to the management committee in 1980. When the firm went public in 1999, Goldman Sachs Group Inc. took its name.

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

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

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

“The single biggest difference between being a block trader and running a gallery was that on Wall Street we were just providing liquidity to our clients; we weren’t advising them on what to buy, what to sell,” Mnuchin said, according to a 2015 article in Artspace magazine.

According to Artspace, he has spent the past “quarter-century, mostly out west at the Metropolitan Museum of Art, exhibiting exhibitions of American art filled with wit, a sense of history, and the kind of quality one tends to find a few blocks away.”

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