Goldman Sachs Group Inc.’s GS 1.26% incoming chief executive is installing investment bankers in the Wall Street firm’s senior-most roles, capping a power shift away from a trading business that has struggled to make money since the financial crisis. David Solomon, who takes over as Goldman’s CEO on Oct. 1, on Thursday tapped as his deputy John Waldron, who will be the firm’s president and chief operating officer. Stephen Scherr will take over as financial chief, succeeding Martin Chavez, who has been in the job just over a year, the company said. The shake-up, earlier reported by The Wall Street Journal, shows Mr. Solomon swiftly reshaping leadership of the firm he will take over from outgoing Chief Executive Lloyd Blankfein. It also represents a triumph of Goldman’s investment bankers over its traders. David Solomon (center) is slated to become Goldman’s chief executive next month. Here, he attends a 2016 reception with current Goldman CEO, Lloyd Blankfein (left), and incoming finance chief Stephen Scherr. Photo: Sean Zanni/Patrick McMullan/Getty Images The cadre of traders and securities salesmen that Mr. Blankfein promoted to top jobs are nearly all gone. In their place is a crew of besuited deal makers steeped in the business of schmoozing clients, raising money and doling out advice. A decade after the crisis, which cast Goldman as the poster child of the reckless and self-interested dealings that nearly tanked the economy, Mr. Solomon is steering the firm back to its roots as an adviser and broker for big companies and institutions. Mr. Chavez, a computer engineer who came up through Goldman’s trading arm, will return to that division as a co-head. He leaves the CFO job after 18 months in which Goldman stumbled in the Federal Reserve’s annual stress tests and disappointed investors by reducing its stock buyback. Its share price has lagged behind peers, and Mr. Chavez’s answers on quarterly conference calls at times failed to reassure shareholders unnerved by Goldman’s trading woes and its expansion into new businesses. He approached Mr. Solomon earlier this summer and suggested the move, according to people familiar with the matter. Back in the trading division, Mr. Chavez is expected to help Mr. Solomon cut costs and move more of its client interactions onto apps and other digital pipelines. Wall Street banks are leaning heavily on coders as more trading goes electronic, and Mr. Chavez has been a champion of Goldman’s push to open up its internal technology to clients. Mr. Waldron, 49 years old, co-heads Goldman’s investment-banking arm, which generates about one-third of the company's profits. Mr. Scherr, 54, is overseeing its push into Main Street banking. Both men cut their teeth at Goldman in capital markets, the business of helping companies raise money, and have worked directly for Mr. Solomon before. Mr. Blankfein, by contrast, rose through the ranks as a metals trader as that business boomed in the 2000s. Along the way, he promoted comrades from the fixed-income trading floor to senior roles, including Mr. Chavez, Harvey Schwartz and Gary Cohn, who went on to a role in the Trump White House. Martin Chavez, speaking at a gala in 2012, is moving back to Goldman Sachs’ trading division after a stint as the firm’s chief financial officer. Photo: andrew burton/Reuters But trading revenues have fallen sharply since the crisis, and Goldman’s axis of power has tilted toward its investment bankers, who broker corporate mergers and underwrite stock and bond offerings. Messrs. Cohn and Schwartz both left, and two top trading executives close to Mr. Blankfein retired earlier this year after Mr. Solomon was tapped as the firm’s next CEO. Thursday’s promotions of Messrs. Waldron and Scherr cap a swift rise for both men. Four years ago, Mr. Scherr was Goldman’s head of strategy, a backwater assignment at a bank that rarely made big changes or acquisitions. Mr. Waldron had just returned from a stint in London and was tasked with reviving a client-coverage effort that had fallen by the wayside. They now join a rarefied circle. Despite its postcrisis challenges, Goldman remains an elite firm, with a grip on Wall Street and Washington that ensure its executives a voice in pressing matters. Mr. Waldron has been one of Mr. Solomon’s closest confidants for more than two decades. The pair worked together at Bear Stearns in the 1990s, and Mr. Solomon, who came to Goldman in 1999, soon recruited his protégé to join. They have neighboring vacation homes in the Bahamas and travel in overlapping social circles, stacked with financial and business bigwigs. A father of six, Mr. Waldron specialized in media and telecom companies—he is a top adviser to Rupert Murdoch —and was promoted to his current job in 2014. (Mr. Murdoch is executive chairman of News Corp, which publishes the Journal.) Mr. Scherr isn’t personally close to Mr. Solomon—the two have butted heads over the years, according to people who know them—but holds the keys to Goldman’s consumer and commercial-banking businesses, a top priority. A trained lawyer who once clerked for a federal judge, Mr. Scherr also spent his early years at Goldman as a banker to media and telecom companies and later ran the firm’s Latin American business. He is now steering Goldman’s push into Main Street businesses including credit cards, commercial banking and wealth management—a high-stakes bet that the firm can succeed in areas where it has little experience. The elevation of Messrs. Scherr and Waldron will open seats lower down at Goldman. A leading candidate for Mr. Waldron’s job as co-head of investment banking is Daniel Dees, who runs technology banking from California, according to people familiar with the matter. Mr. Scherr’s duties overseeing the consumer bank will likely go to Harit Talwar, who has been running the business day-to-day, and Mr. Solomon may look to hire from the outside as Goldman gets deeper into commercial banking. Write to Liz Hoffman at liz.hoffman@wsj.com<doc-sep>Goldman Sachs announced a big shakeup on Thursday as incoming CEO David Solomon cements his new leadership team before taking over for Lloyd Blankfein in October. The changes represent the rise of investment bankers over traders, who dominated the top ranks under Blankfein and have jockeyed back and forth with the bankers for power during much of the firm's history. But since the aftermath of the financial crisis, revenue derived from providing clients with advice on mergers and capital raising have proven to be more stable than trading. Solomon and his deputies have a number of challenges ahead of themselves. Goldman last year embarked on a $5 billion growth plan and is also trying to grow out its consumer banking business. Here are the new leaders at the top of Goldman.<doc-sep>(Reuters) - Goldman Sachs Group Inc on Thursday announced its biggest management shakeup since naming David Solomon as Chief Executive Officer Lloyd Blankfein’s successor. The logo of Goldman Sachs is displayed in their office located in Sydney, Australia, May 18, 2016. REUTERS/David Gray/File Photo Long-term insider John Waldron will take over as president and chief operating officer. Waldron, who currently runs investing banking, will become Solomon’s No.2 when he takes the CEO role in October. Stephen Scherr will replace Martin Chavez as chief financial officer. Scherr, who has been with the bank for more than two decades, will take over on Nov. 5. (bit.ly/2MrpEda) Chavez will become vice chairman and co-head of the securities division, the company said. Analyst Stephen Biggar of Argus Research was surprised by the announcement, but said Solomon was trying to put together his team. “It is unexpected. But the timing kind of says the story.” The bank, once considered the most savvy Wall Street trading house, has suffered because of tougher regulation since the 2007-2009 financial crisis and low market volatility crimping revenues. In its latest reported results, the bank lagged rivals such as JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp in equity trading. On a call with analysts after the results, executives, including Chavez, were pressed for details on the bank’s strategy and disclosures on new businesses. “John and Stephen will work closely with me to develop and execute our strategy, grow our client franchise, ensure strong risk and capital management and safeguard our unique culture,” said Solomon. Shares of the bank were nearly flat in afternoon trading. The stock has been the worst performer among the top six U.S. banks.<doc-sep>"The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they're settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges," Chavez said. The CFO said Goldman is working on a type of derivative for bitcoin because "clients want it." "I never thought I would hear myself use this term but I really have to describe that news as fake news," Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference in San Francisco. A top Goldman Sachs executive looked to clear the air Thursday about the bank's cryptocurrency ambitions after reports that it was abandoning plans to open a trading desk for cryptocurrencies. The price of bitcoin and other top cryptocurrencies tumbled after the initial report by Business Insider earlier this week. The Wall Street giant has been considering the launch of some sort of cryptocurrency option for clients for the past year. But it's never been quite clear just what the bank was planning. "In response to client interest in digital currencies, we are exploring how best to serve them in this space," a Goldman spokeswoman told CNBC in October. The bank's outgoing CEO Lloyd Blankfein tweeted in October that Goldman was "still thinking about bitcoin," and that the bank was "not endorsing/rejecting." Chavez on Thursday looked to knock down this week's report about the bank dialing back plans, but also make clear that there's never been a timeline for this effort. "When we talked about exploring digital assets that it was going to be exploration that would be evolving over time," Chavez said. "Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but its not here yet." Goldman Sachs has been clearing bitcoin-linked futures contracts offered by the CBOE and CME since May, and is providing clients liquidity for those futures. As for physical bitcoin, Goldman is not quite there. There needs to be a safe custody solution before the bank can move forward, the bank's CFO said. "Physical bitcoin is something tremendously interesting, and tremendously challenging," he said. "From the perspective of custody, we don't yet see an institutional-grade custodial solution for bitcoin, we're interested in having that exist and it's a long road." Issues with bitcoin's volatility, security, and where to store the actual assets have all been barriers to entry for institutional investors. The possibility of establishments like Goldman entering the market have boosted sentiment, and prices in the past year. Bitcoin has struggled to recover to its high near $20,000 hit in December, and was trading near $6,400 Thursday. The value of the entire cryptocurrency market has dropped by more than 65 percent this year, according to data from CoinMarketCap.com.<doc-sep>
Solomon has named Stephen Scherr as chief financial officer, replacing Martin Chavez, the firm said Thursday. Chavez, a technologist who has been CFO since May 2017, will return to the firm's trading division as one of three co-heads. He also was named vice chairman. Solomon also named John Waldron as the bank's president and chief operating officer, a move that had been widely expected within the New York-based bank's ranks. Waldron had been a co-head of the firm's investment banking division, an ascendant business that Solomon himself came from. The moves are Solomon's biggest since being formally named as CEO Lloyd Blankfein 's successor earlier this year. He is putting his imprint on his direct reports ahead of taking over from Blankfein on Oct. 1. Among Solomon's challenges are to execute on a $5 billion revenue growth plan by expanding the firm's client base and pushing into consumer finance. Scherr had been head of the consumer and commercial banking division. "John and Stephen will work closely with me to develop and execute our strategy, grow our client franchise, ensure strong risk and capital management and safeguard our unique culture," Solomon said in the announcement. "I have worked with John and Stephen for nearly two decades and am confident that they bring the right complement of skills to help lead the firm through their respective roles." The management turnover represents the rise of veteran investment bankers over traders at Goldman Sachs. Blankfein had been a precious metal salesman and rose through the ranks of the trading division, which has dominated the firm for much of its history as a publicly traded company. Solomon, Waldron and Scherr all have deep roots in the investment banking side. Advisory and capital markets desks have proved to be more dependable sources of revenue compared with trading, which has never recovered from a 2009-2010 high water mark as regulation and calm markets stifled activity. While Waldron's promotion was expected, it was originally thought that he would have a co-president, perhaps someone who hailed from the firm's trading division.