Robert Rubin and his protégés - Goldman Sachs Risk Arbitrage

In the 1970s, deep inside Goldman Sachs’ trading floor, a quiet revolution was taking place. It didn’t come from flashy IPOs or headline-grabbing deals, but from a small, intense corner of the firm known as the Risk Arbitrage Department — led by a former lawyer named Robert Rubin.

Rubin wasn’t just trading merger spreads. He was teaching a way of thinking — about probability, discipline, and the art of managing risk.

Over the next two decades, the alumni of that desk — his “Rubin Cubs” (my term) — would go on to shape the modern hedge fund industry. They founded firms like Farallon, Perry Capital, Eton Park, Och-Ziff, Taconic, ESL, and TPG-Axon, collectively managing hundreds of billions of dollars and influencing everything from event-driven investing to political policy.

They came from different backgrounds — engineers, lawyers, economists — but all absorbed the same gospel: Control the downside and do the fundamental work.

This article traces the story of that lineage — from Rubin’s own rise at Goldman Sachs to the ascent, triumphs, and stumbles of his protégés across decades of market cycles.

Let’s dive in.