Ex-Goldman Sachs Group Inc trader, Matthew Taylor, has pleaded guilty to concealing an unauthorised US$8.3 billion trading position in 2007, causing the bank to lose US$118 million.
Having handed himself over to the FBI, Taylor pleaded guilty in New York federal court to wire fraud over the scam.
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Taylor said that on 13 December 2007, he accumulated a position 10 times the amount he was allowed to take in futures contracts tied to the Standard & Poor’s 500 Index (SPX).
He said he made false entries in a manual trading system to hide the position on the CME Globex electronic-trading platform used by Goldman Sachs and said he also lied when questioned about the position by other Goldman Sachs employees.
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.
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By GlobalDataTaylor attempted to hide his actions by putting false information into a manual entry system, according to charging documents filed in his case. When supervisors and other employees confronted him about discrepancies compared with his actual positions, Taylor repeatedly lied, the document said.
Taylor said he covertly built the position in an effort to restore his reputation and increase his bonus. He earned a US$150,000 salary and expected a bonus of US$1.6 million, according to court documents.
Prosecutors are seeking a prison sentence of 33 months to 41 months and a fine of $7,500 to $75,000.
Taylor said he knew his actions were wrong and illegal but established the trade anyway to augment his reputation and increase his compensation.
Taylor’s bail includes a $750,000 bond with two co-signers. His sentencing hearing is set for July 26.
