We've noted before that some banks were selling off alternative investment units even before the Dodd-Frank bill passed. The law itself proved to be much less onerous than people initially feared. However, we may see more investment banks go ahead and sell off more hedge funds and private equity funds. Morgan Stanley (NYSE: MS), for example, is apparently spinning off its FrontPoint Partners hedge fund unit, according to CNBC.

While the rules remain fuzzy and will likely remain so for years, it may make sense for banks to reconsider their portfolio of offerings. The truth is that not all funds fit with the overall strategy. And this is a great opportunity to move away from some funds under the guise of compliance with the Volcker Rule. If a bank really wants to hang onto a fund, it will likely find a way under the new rules, as they become clearer over the next year or so.  

For more:
- here's the CNBC article

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