Defendant Sentenced in Manhattan Federal Court
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Matthew Taylor, formerly a vice president at Goldman, Sachs & Co., was sentenced today in Manhattan federal court to nine months in prison for fraudulently amassing and concealing an approximately $8.3 billion trading position in an account that Taylor managed at Goldman Sachs.
Taylor pled guilty in April 2013 to one count of wire fraud in connection with the scheme, and was sentenced by U.S. District Judge William H. Pauley III.
According to the Information to which Taylor pled guilty, and statements made in court proceedings, Taylor was a member of the CSFT desk and was responsible for a trading account called the CSFT Equity Volatility Portfolio, which included trading in equity derivatives products.
Among the products that Taylor traded on the CSFT desk were Standard & Poor’s E-mini futures contracts, which are futures contracts tied to the S&P 500 stock index. Taylor traded in S&P E-mini futures using an electronic trading platform called “Globex.”
In November 2007, Taylor had lost a significant portion of the profits that he had accumulated in the Trading Account earlier that year. As a result, he was instructed by his supervisors to reduce the overall risk in the Trading Account.
Despite these instructions to reduce the risk in the Trading Account, on December 13, 2007, Taylor significantly increased the notional value of his long position in S&P E-mini futures by entering a series of electronic trades through Globex. In so doing, he amassed a position that far exceeded all trading and risk limits set by Goldman Sachs, not only for individual traders, but for the entire CSFT desk.
Taylor increased the profitability of the Trading Account in order to restore his professional reputation within Goldman Sachs and to increase his performance-based compensation. At the same time that Taylor increased his S&P E-mini futures position, he actively concealed this position from others at Goldman Sachs.
Taylor recorded multiple false entries for S&P E-mini futures trades that he never made in a manual trade entry system, which was typically intended to be used by traders for recording trades that – unlike S&P E-mini futures – could not be executed through the Globex electronic trading platform.
The purpose of entering these fabricated trades was to conceal and understate the true size of the S&P E-mini futures position within the Trading Account, as the fictitious sales functioned to offset portions of Taylor’s actual purchases.
In addition, at the end of the trading day on December 13, 2007, Taylor prepared a false profit and loss report for the Trading Account (the “December 13, 2007, P&L Report”) that served to conceal his actual oversized position and market risk.
He then forwarded the December 13, 2007, P&L Report to his supervisors and others at Goldman Sachs. By the morning of December 14, 2007, however, various employees at Goldman Sachs had detected a significant discrepancy between Taylor’s actual position in the Trading Account and what Taylor had falsely reported in the December 13, 2007, P&L Report.
In response to questioning from these employees, Taylor made various false statements and provided false documents to conceal the true size and risk of the Trading Account.
Key Facts
- State: New York
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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