Ex-Goldman trader Taylor pleads guilty to wire fraud

Wed Apr 3, 2013 4:35pm EDT
 
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By Lauren Tara LaCapra and Nate Raymond

NEW YORK (Reuters) - Ex-Goldman Sachs Group Inc trader Matthew M. Taylor pleaded guilty on Wednesday to defrauding the Wall Street bank with an unauthorized $8.3 billion futures trade in 2007, saying he exceeded internal risk limits and lied to supervisors to cover up his activities.

Taylor, 34, pleaded guilty to one count of wire fraud in federal court in lower Manhattan on Wednesday morning, after voluntarily turning himself into federal authorities earlier in the day.

The Massachusetts Institute of Technology graduate pleaded guilty about four months after the Commodities Futures Trading Commission filed a civil complaint against him. The CFTC accused Taylor of fabricating trades to conceal a huge, unauthorized position in e-mini Standard & Poor's futures contracts, which bet on the direction of the S&P 500 index.

Taylor on Wednesday told U.S. District Judge William Pauley that his trading position at Goldman exceeded risk guidelines set by his supervisors "on the order of 10 times." He also admitted to making false statements to Goldman personnel who questioned him about the position, which led to a $118 million loss for Goldman Sachs.

"I am truly sorry," Taylor said.

'FAR EXCEEDED' RISK LIMITS

Taylor, who joined Goldman in 2005, worked in a 10-person group called the Capital Structure Franchise Trading (CSFT), and was responsible for equity derivatives trades.

After his trading profits plunged in late 2007, his supervisors told Taylor his bonus was going to be cut and instructed him to reduce risk-taking, the charging documents said.   Continued...

 
Former Goldman Sachs trader Matthew Taylor departs Manhattan Federal Court in New York, April 3, 2013. REUTERS/Brendan McDermid