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Ex-Goldman Sachs trader pleads guilty to concealing trades

PUBLISHED : Friday, 05 April, 2013, 12:00am
UPDATED : Friday, 05 April, 2013, 5:10am

Former Goldman Sachs trader Matthew Taylor pleaded guilty to concealing an unauthorised US$8.3 billion trading position in 2007, causing the bank to lose US$118 million.

Under an agreement with the government, Taylor, 34, pleaded guilty to a single count of wire fraud on Wednesday before US District Judge William Pauley in a Manhattan federal court. He told the judge he took the position to boost his standing, and his bonus, at Goldman Sachs.

Reading from a prepared statement, Taylor told Pauley that on December 13, 2007, he accumulated a position 10 times the amount he was allowed to take in futures contracts tied to the S&P 500 Index. 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. He said he lied when questioned about the position by other Goldman Sachs employees.

"I accumulated this trading position and concealed it for the purpose of augmenting my reputation at Goldman and increasing my performance-based compensation," Taylor said. "I am truly sorry."

Before accepting the guilty plea, Pauley questioned a provision in the agreement stipulating that the loss, for sentencing purposes, was the US$1 million to US$2.5 million Taylor hoped to win in bonuses from the trades, instead of the US$118 million loss suffered by Goldman Sachs. The maximum sentence for wire fraud is 20 years in prison. Both sides agreed that federal sentencing guidelines, which are not binding, called for Taylor to get 33 to 41 months in prison and a fine of US$7,500 to US$75,000.

Pauley asked why prosecutors did not seek a higher guideline range for Taylor for jeopardising the safety and soundness of a financial institution.

"I want to just make it very clear to the defendant and his counsel that the court is puzzled by the lack of any enhancements in this case, with a loss of US$118 million," the judge said.

Pauley said he is not bound by the plea agreement and warned that Taylor cannot withdraw his guilty plea if he gets more prison time than he expected. After discussing the matter with his lawyer during a brief recess, Taylor went forward with the plea.

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