Matthew Marshall Taylor, a Florida resident and former trader, is facing charges of large-scale fraud after allegedly concealing a massive trading position from his employer, a major futures commission merchant (FCM). The U.S. Commodity Futures Trading Commission (CFTC) filed a civil complaint against Taylor on November 8, 2012, in the U.S. District Court for the Southern District of New York.
According to the complaint, Taylor fabricated trades in S&P 500 e-mini futures contracts during November and December 2007. He bypassed the FCM’s standard electronic trading system, manually entering the false trades directly into the company’s internal books and records, effectively hiding them from the Chicago Mercantile Exchange (CME).
The scheme involved concealing the true size of his e-mini futures position, along with the associated risks and potential profits or losses. On December 13, 2007, Taylor allegedly concealed a position valued at approximately $8.3 billion, measured by notional value.
The FCM ultimately discovered the deception and liquidated the position, resulting in realized losses of approximately $118,440,000. Taylor is also accused of providing false information to his employer regarding the firm’s e-mini futures position, risk exposure, and profit and loss statements, obstructing their ability to detect the fraudulent activity.
The CFTC is seeking civil monetary penalties, a ban on future trading and registration, and a permanent injunction to prevent further violations of federal commodities laws. The case is being pursued by Janine Gargiulo, Trevor Kokal, Judith Slowly, David Acevedo, Lenel Hickson, Stephen Obie, and Vincent McGonagle of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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