By Basil Katz
NEW YORK, Nov 8 (Reuters) – U.S. regulators on Thursday
accused a former Goldman Sachs Group Inc trader of
defrauding the Wall Street bank of $118 million in a scheme of
fabricated trades and fake entries.
In a lawsuit filed in the U.S. District Court in Manhattan,
the Commodity Futures Trading Commission (CFTC) said Matthew
Marshall Taylor had manually entered fake trades in November and
December 2007, in an attempt to conceal an $8.3 billion position
in futures contracts.
The scheme cost the bank $118.44 million, the CFTC said.
“By entering fabricated trades and concealing the position
… (the) defendant engaged in fraudulent acts and practices,”
the civil fraud complaint said. “Taylor’s fabricated trades had
the effect of concealing and misrepresenting the size of his
e-mini futures position within his employer’s internal systems.”
The CFTC is seeking a $130,000 civil penalty against Taylor,
who currently resides in Florida, the complaint said.
Ross Intelisano, a lawyer for Taylor, could not immediately
be reached for comment.
The CFTC complaint did not name Goldman but referred to
Taylor’s employer at the time of the suspected fraud only as a
“large Futures Commission merchant.”
However, broker records from the Financial Industry
Regulatory Authority, Wall Street’s industry funded regulator,
showed that Taylor was discharged from Goldman in Dec. 2007 for
“alleged conduct related to inappropriately large proprietary
futures positions in a firm trading account.”
A Goldman Sachs spokeswoman said the bank had terminated
Taylor’s employment after his suspected conduct had been
discovered, and that customer funds had not been affected.
“The trader provided false explanations when confronted
about irregularities we detected in his account during the
December 14, 2007 trading day,” Goldman spokeswoman Tiffany
Galvin said in a statement.
The complaint said that as Taylor’s supervisors began
questioning him about discrepancies in his numbers, Taylor at
one point “falsely represented that he had misbooked a trade or
put too many zeroes in the quantity field.”
At the time of the suspected offense, Taylor was a vice
president at the bank’s Capital Structure Franchise Trading
desk, the complaint said.
After leaving Goldman, he went on to work at Morgan Stanley
, broker records showed. A spokesman for the bank de clined
co mment.
The case is U.S. Commodities Futures Trading Commission v.
Matthew Marshall Taylor, U.S. District Court for the Southern
District of New York, No 12-cv-8170.
