Emanuel J. Friedman is considering opening his own money-management firm.

The former co-chief executive of Friedman, Billings, Ramsey Group Inc., who has been under a regulatory cloud since he was forced to resign from the company in April, has told friends and old FBR colleagues that he intends to provide investment advice at a company he is forming with FBR's former chief stock trader Scott E. Dreyer.

Several sources familiar with the effort, who spoke on condition of anonymity because their conversations with Friedman were private, said he may begin accepting accounts within weeks.

"He's made a lot of money for a lot of people over the years," a source said. "He won't have trouble getting clients, at least at the start."

Friedman last week was noncommittal. "Right now I'm just managing my family money," he said. "Sometime in the future I may do something more."

Dreyer declined to comment.

Friedman, a former history teacher who co-founded FBR in 1989 and helped turn the Arlington-based firm into one of the nation's leading underwriters of newly public companies, sounded upbeat in a brief phone interview on Friday. "I'm actually doing great," he said. But he would not discuss the investigation of him by the NASD and the Securities and Exchange Commission that led to his departure from FBR.

SNL Financial, an investor information service in Charlottesville, reported Friedman's plans to start a money management firm on its Web site last Wednesday.

Friedman, Dreyer and former FBR compliance chief Nicholas J. Nichols left the firm after regulators discovered irregular trading in the stock of CompuDyne Corp. in 2001 before an FBR-managed private stock placement for the Maryland security-products company. A New York hedge-fund investor has paid $1.45 million in fines to settle insider trading charges for trading in CompuDyne before the stock placement.

FBR said in April that it offered to pay $7.5 million to settle charges against the company arising out of the CompuDyne deal.

Friedman, Dreyer and Nichols received notices last month from the NASD and the SEC that they may be subject to a civil enforcement action in the case, according to documents filed by FBR.

Even if Friedman were to become the subject of an enforcement action and lose his NASD brokers license -- with emphasis on the "if" -- he could still make a good living managing money for the right kind of clients. Hedge funds are not licensed by the NASD but manage hundreds of billions of dollars for sophisticated or wealthy individuals and institutions. As long as the investor qualifies, a hedge fund doesn't need a license. Hedge-fund management is what Friedman spent a large part of his time at FBR doing in the past few years.

Friedman was known for his ability to articulate the rationale for unconventional investment-banking deals and was a key player in FBR's evolving strategies in the last decade, but former colleagues say his true love was trading stocks. He spent hours a day on FBR's trading floor, where traders tracked his moods with the timing and success of his daily market bets. Former colleagues say Friedman is also one of the most astute investors in banking, financial services and real estate stocks.

Goldman, Sachs Exits MCG

Goldman, Sachs & Co. is winding down its seven-year investment in Arlington's MCG Capital Corp. Last week it sold 2 million shares of MCG in an underwritten stock offering, which followed the sale of another 2 million Goldman-owned shares of MCG in December.

Funds managed by New York-based Goldman financed the management-led buyout of MCG from what was then First Union Corp. in 1998. MCG was the specialty lending and equity business of First Union (now Wachovia), making loans to, and investments in, mid-size media, technology and telecommunications companies. Chief executive and former chairman Bryan J. Mitchell led the 1998 buyout.

MCG has encountered some bumps along the way. While Goldman may have made money on its MCG investment, it doesn't appear to have been a home-run deal.

Goldman put $80 million into the 1998 buyout. By the time MCG went public in 2001, right in the teeth of the post-9/11 market unease, that investment translated into roughly 6 million shares of MCG stock. MCG's initial stock offering was a bit rocky, and the firm reduced the size of the offering and the per-share price to get the deal done. MCG's concentration in telecommunications investments didn't exactly attract investors at the time.

In November 2002, MCG's board removed Mitchell from the chairman's job for failing to correct a long-standing error on his resume. His bio said he had graduated from Syracuse University, but he didn't earn enough credits to graduate. The error made it into SEC filings and presentations to investors for more than a year before it was corrected. Mitchell remains chief executive and a board member.

MCG went public at $17 a share. It closed Friday at $16.42. But stock price appreciation isn't the only measure of performance for MCG. As a business development company, it passes most of its profits on to its shareholders in the form of dividends.

So in determining whether Goldman has made money on MCG, dividends have to be added to the equation. By my calculation, MCG has paid Goldman a total of $40 million in dividends since its IPO in 2001. Add to that the $68 million that MCG grossed in the two open market sales of MCG stock, and Goldman has grossed about $108 million on its original $80 million investment -- and it still owns roughly 2 million shares of MCG worth about $32 million. That's a return of about 1.75 times over seven years. But to be considered successful, most leveraged buyout deals must return more than two times the investment, and usually over a shorter period.

An MCG spokeswoman declined to comment on the Goldman sale. A Goldman spokesman did not respond a phone inquiry Friday.

Riggs Veterans Form Trust

Executives who managed a union-owned real estate portfolio at Riggs Bank have formed a trust company to take over management of the portfolio.

Former Riggs executive vice president Patrick O. Mayberry and two partners recently formed Bethesda-based Rushmore Partners, a holding company for a newly formed Maryland trust bank, to take over trusteeship of the Multi-Employer Property Trust (MEPT). According to SEC documents, the three capitalized Rushmore with $8.2 million in limited liability units sold to 19 investors.

PNC Bank, which last month took over Riggs, is set to transfer the trusteeship of the MEPT to Rushmore's trust company, said Landon V. Butler Jr., whose company provides investor relations services to the MEPT and who is also a partner in Rushmore. He declined to discuss the terms of the deal.

The MEPT is a $4.35 billion fund that owns interest in 166 properties. Its investors are union pension funds, and the fund is allowed to buy only union-built properties. It was created by Butler in 1982, and its original trustee was the old National Bank of Washington, which Riggs took over in 1990. Kennedy Associates Real Estate Counsel of Seattle is the real estate adviser to the fund and helped Butler get MEPT up and running in 1982.

Kennedy's Jim C. Snyder is the third lead investor in Rushmore. Robert B. Edwards, a former Riggs executive who helped manage MEPT with Mayberry, is joining Rushmore as an executive.

"We formed the trust bank with [PNC's] cooperation and negotiated an orderly transfer of the fund," Butler said. "The entire management team from Riggs will move to the new bank."

Terence O'Hara's e-mail address is oharat@washpost.com.