Ex-Goldman Sachs trader faces fraud charge after surrender to FBI

http://www.guardian.co.uk/business/2013/apr/03/goldman-sachs-trader-fbi-fraud

Ex-Goldman Sachs trader faces fraud charge after surrender to FBI
Matthew Taylor expected to plead guilty amid accusations he defrauded firm by concealing a $8.3bn futures bet gone wrong
Dominic Rushe in New York

guardian.co.uk, Wednesday 3 April 2013 12.10 EDT

A Goldman Sachs sign on the floor at the New York Stock Exchange. Photograph: Brendan Mcdermid/Reuters

A former Goldman Sachs trader surrendered to FBI agents Wednesday amid accusations that he concealed a $8.3bn futures bet that went wrong.

Matthew Taylor surrendered to the authorities at 8.30am on Wednesday and was scheduled to appear in federal court in lower Manhattan where he is expected to plead guilty to securities charges.


In a civil lawsuit last year the Commodity Futures Trading Commission (CFTC) accused Taylor of defrauding his then employer about a futures position in December 2007 that resulted in a loss of $118.4m.

According to the CFTC Taylor allegedly fabricated trades in e-mini futures, contracts tied to market indexes electronically traded on the Chicago Mercantile Exchange. He allegedly bypassed internal checks and concealed his position by providing false, misleading and deceptive information to his employer, the CFTC said.

"Matt Taylor has accepted responsibility for his conduct today. The unfortunate events of late 2007 were an aberration. He looks forward to the opportunity to put this behind him and resume what has otherwise been a productive and exemplary life," said a spokesman for his law firm Clayman & Reosenberg.

Last year Goldman agreed to pay $1.5m to settle CFTC charges that it "failed to have policies or procedures reasonably designed to detect and prevent" improper trades. Goldman pledged to enhance its controls and noted the Taylor trades did not impact customer funds.

The size of the fine split the CFTC's commissioners. At the time Bart Chilton, a Democratic commissioner at the agency, said the fine was too low.

"Given the egregious nature of the failure to supervise adequately, combined with the high number of violative transactions, I believe that the monetary penalty should be significantly higher in order to represent a sufficient punishment, as well as to denote a meaningful deterrent to future illegal activity," Chilton said in a dissenting opinion.

He said he did not believe that the $1.5m fine was "anywhere close to an amount representing a sufficient penalty or deterrent."