NEW YORK – A former trader at Goldman Sachs pleaded guilty Wednesday to fraud linked to a scheme to hide an unauthorized $8 billion E-mini futures bet he made at the U.S. banking giant.
Matthew Marshall Taylor could face a maximum penalty of 20 years in prison, but prosecutors recommended a much lighter 33 to 41 months as a result of the plea deal.
The trader was on Goldman Sachs’ Capital Structure Franchise Trading desk in New York with a salary of $150,000 and expecting a bonus of $1.6 million in 2007, the year that he turned rogue, prosecutors say.
In November 2007, after he lost a “significant portion” of profits he’d earned in his account that year, Taylor was told by superiors to scale back his risk-taking and informed his bonus would be cut back. It was then that he embarked on an unauthorized trading spree in S&P 500 E-mini futures that racked up an $8.3 billion position — not only exceeding his own risk limits, but the limits for all the other traders on his desk, prosecutors said.
He then tried to cover up his trades with false records “to conceal and understate the true size” of his position, the criminal information said. Finally, his plot was discovered by internal management.