July 28 (Bloomberg) -- Citigroup Inc. may move a team of proprietary traders into its hedge-fund unit, one of at least three alternatives the U.S. bank is studying to comply with the Dodd-Frank Act, people briefed on the matter said. Traders in the Citi Principal Strategies unit, led by Sutesh Sharma, would be reassigned to Citi Capital Advisors, which mostly oversees money for outside investors, said the people, speaking anonymously because the talks are preliminary. The bank would set up the traders as hedge-fund managers and seed their funds, then raise money from outside investors to redeem its stakes, the people said. âThis may be a way of keeping a high-margin capital- markets business in the fold, within the language of the law,â said David Hendler, a senior analyst at New York-based research firm CreditSights Inc. âThey would be transforming it from an- interest-plus-capital-gain business into a fee business.â Citigroup and Goldman Sachs Group Inc. are among U.S. firms grappling with provisions in the law signed last week requiring banks to stop using their own money to wager on securities and markets. The changes were advocated by former Federal Reserve Chairman Paul Volcker, who said banks supported by federal deposit insurance shouldnât be allowed to speculate. http://noir.bloomberg.com/apps/news?pid=20601087&sid=aVJjykgakENU&pos=5 So many principal desk traders, hum EX principal desk traders out there...now, "every"body is a "hedge"fund trader...so, what are they hedging ? Their capital gains tax ?