Ex-Goldman Prop Trader Who Concealed $8.3 Billion Market Moving E-Mini Position, Turns Himself In To FBI

Tyler Durden's picture

The story of ex-Goldman's prop-trader Matt Taylor is well known: in November of last year, he was accused by the CFTC of concealing a massive, market-moving $8.3 billion ES position, and was charged by the CFTC, who sought a whopping $130,000 in penalties for what was obviously an attempt to move the market using size and scale (a la Bruno Iksil) on December 13 and 14, 2007. Taylor, who left Goldman in 2008 because apparently his attempt had been discovered amid allegations of "conduct related to inappropriately large proprietary futures positions in a firm trading account" and ended up working as Co-Head Single Stock Derivatives at Morgan Stanley until July 2012, prudently denied all accusations. However, roughly an hour ago, news broke that he had finally turned himself in to the Feds and is now expected to plead guilty to what for now are still unclear criminal charges.

From Reuters:

Ex-Goldman Sachs Group Inc trader Matthew Marshall Taylor has turned himself in to federal authorities in connection with charges that he defrauded the Wall Street bank out of $118 million in 2007, two sources familiar with the matter said.


Taylor voluntarily turned himself in to agents with the Federal Bureau of Investigation in New York around 8:30 a.m. EDT on Wednesday morning, said the sources, who spoke on condition of anonymity.


Taylor's move on Wednesday is related to criminal charges that are expected to come from federal prosecutors in New York. He is expected to plead guilty to those charges later on Wednesday, the sources said. It was not clear precisely what he will be charged with.

Some more on the pre-story from Bloomberg:

Morgan Stanley hired Taylor after a subprime mortgage- related trading position resulted in a $9.4 billion writedown in December 2007, which caused the New York-based company to oust co-president Zoe Cruz and sell a $5 billion stake to state- controlled China Investment Corp.


Taylor, who handled client-related equity derivative trading at Morgan Stanley, left the firm in July, said Mark Lake, a company spokesman in New York. Taylor’s departure wasn’t related to the CFTC complaint filed against him Nov. 8, said a person familiar with the situation who asked not to be identified because the information was private.


According to the CFTC complaint filed in federal court in Manhattan, Taylor concealed his position by bypassing the firm’s internal system for routing trades to the Chicago Mercantile Exchange and manually entering fabricated futures trades in a different internal system.


Matt Taylor provided false explanations when confronted about irregularities we detected in his account during the Dec. 14, 2007, trading day,” Michael DuVally, a Goldman Sachs spokesman, said in an e-mailed statement. “He admitted his misconduct following the market close, and was promptly removed from his job and terminated soon thereafter.”


Taylor’s lawyer, Ross Intelisano of New York, said his client denied all the allegations and is disappointed that the CFTC filed a complaint.


Matt never intentionally entered ‘fabricated trades’ to conceal any trading activity and Goldman never alleged he did so at the time of his termination or thereafter,” Intelisano, of Rich, Intelisano & Katz LLP, said in an e-mailed statement. “Matt, himself, brought the trading losses to the attention of senior managers at Goldman on the day they occurred.”


CFTC said in its complaint that by Dec. 13, 2007, “Taylor’s scheme culminated in his concealment of a notional value of an approximately $8.3 billion long e-mini futures position.” E-minis are futures contracts tied to the S&P 500 Index.

Take home lesson boys and girls? When attempting to corner the ES (and thus the entire stock market) by using a (failed) Monte Carlo strategy, i) have an unlimited balance sheet, kinda like what Bruno Iksil thought he had, preferably funded by customer deposits ii) keep doubling down and don't screw up; iii) if you screw up, never admit you did anything wrong, and iv) if i, ii and iii above fail, plead ignorance and get a job at Morgan Stanley which apparently will welcome anyone who has problems with i, ii and iii with open arms. And, of course, v, make sure to have lots and lots of money stashed in an offshore bank account for rainy days... preferably not in a Cypriot bank.

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101 years and counting's picture

"finally turned himself in to the Fed"

oops.  typo there.  if he had done that, they would pour champagne on him and send him to a non-extradition country.

rajat_bhatia's picture

Bullshit! Goldmanites do God's work! And God works in mysterious ways. Connect the dots! Stop this malicious propaganda against those angels guided by Divine Blankfien. 

malikai's picture

Jesus was arrested, too.

Troll Magnet's picture

too bad for taylor. none of this would be happening if only he was a joo.

NotApplicable's picture

$8.3 Billion? Yeah, but that's just notional...

Pegasus Muse's picture

Wait a minute. The Federal Reserve/US Treasury rig the markets each and every day. So when does the Plunge Protection Team, The Gold Cartel, the Bullion Banksters, et. al. get their Perp Walk?

localsavage's picture

Goldmnites don't believe in Jesus

EscapeKey's picture

sure they are, he's after all their CEO

ToNYC's picture

He didn't make any dough for the rabbis, nor the romans , and the public defender went out for a sandwich. Happens every day, but not everybody gets tagged with being the point man for the Hell antidote and prophylactic bleaching process, while assigning all copyrights and franchising rights to the Vatican Bank as annuity in perpetuity. Amor vincit.

Political_Savage's picture

One must wonder if there is a specific committee within Goldman's management team that decides who the scapegoat is... you know, the opposite of an investment committee.

Buckaroo Banzai's picture

Almost SIX years later, and they are finally on to this guy?? Sorry I'm not buying it. There is a reason this guy is getting thrown under the bus now. And it doesn't have a thing to do with enforcing the law. Because the SEC isn't in the business of enforcing the law, it is in the business of doing exactly what it is told to do, when it is told to do it, in order to either (1) settle scores on Wall Street, or (2) create the illusion of regulated markets. Since this is a 6 year old beef, it's a little late to be doing it to maintain an illusion. Therefore, we must conclude that a score is getting settled.

Eireann go Brach's picture

May he reveal what really goes on at Goldman so he brings down the bigger fish, so he gets to walk free!

firstdivision's picture

He wil not reveal anything, and he will be sentenced to community service at best.  Probably pay a 10k fine.

Papasmurf's picture

He will be picking up trash along Fifth Avenue for half an hour. 

mayhem_korner's picture



Apparently he did not attend Goldman's training on how to properly execute fraud.

Urban Redneck's picture

What do you expect when you can't even get/keep a copy of the power point deck for future reference?

101 years and counting's picture

on page 1, section II of the manual:  "To commit financial fraud and escape prosecution, you need to be senior executive.  Unless you are at this level, just don't get caught"

Charles Nelson Reilly's picture

hey, look at that, Bart Chilton is really making a difference!  what a great american he is. When he gets into the office at 11am after his daily hair appointment, I hope everyone congratulates him.

bnbdnb's picture

Taylor’s scheme culminated in his concealment of a notional value of an approximately $8.3 billion long e-mini futures position.”

What kind of market is it that has holes so big this can even happen? Makes no sense, whatsoever..

mayhem_korner's picture



$8.3 B is a drop in the ocean relative to the derivatives sloshing around. 

(btw, Goldman IS the "market"...this is fodder to get the sheeple to take their eyes off of reality)

Dewey Cheatum Howe's picture

Yeah exactly. I don't work in the field but aren't these large bets recorded as far as who/what/where/when/why and how goes with the CTFC through the system itself.

Al Huxley's picture

I thought excessive long e-mini positions were mandated by the FED.

mayhem_korner's picture



Cue Jack Ruby.

eatapeach's picture

You mean Jack Rubinstein, Israeli mob in America guy? To wack a patsy before he can talk? Maybe.

Jim in MN's picture

What happens when you take 87 blue pills AND 133 red pills?

Look around.

mayhem_korner's picture



You just gave me an awful image of Bob Dole, bub...  Now I need to take an iodine shower.

Sandmann's picture

Witness Protection Program

mayhem_korner's picture



Would it shock you to find this guy sipping mimosa on a private beach in 6 months, using the alias "Pat C"...?

mktsrmanipulated's picture

If you really believe Goldman had no idea what was going on I have a bridge to sell you or a safe bank account in Cypress where you can get 9% a year and have the ability to get all your money out at any time

Dewey Cheatum Howe's picture

What is the FBI into the horse and pony show now to like the SEC? They seem to be doing a lot of perp walks but no charges as of late.

IamtheREALmario's picture

Maybe they need the size and scale for eminis, but in individual stocks they only need a computer.

OldE_Ant's picture

lol.  We promptly got rid of him not because of the losing position he took.  But the fact the FED couldn't print enough cash that day to cover the losses.

Another f'n shill working on the behalf of the FED to cause the markets to lift skyward.  Hell if they kept those positions for longer than a day they probably would have made some serious cha-ching.

Of course anyone who works for the one of the big boys gets fired someone else wants them.

Talk about being on the inside.

fuu's picture

Wonder what his ZH name is.

Temporalist's picture

Free Jon Corzine!

Downtoolong's picture

ended up working as Co-Head Single Stock Derivatives at Morgan Stanley until July 2012

In spite of the CFTC allegations against him for his conduct at Goldman? That's some personnel department they have there at Morgan.

ToNYC's picture

Simple theory: he knew how to make big money, and the last guy took the hit and got it out of his system. The Currency trader newbie guy that made a 100 miilion for BofA back in the 90s got a single million and good nighted. That's the converse: he won't make a new 100 million next year and then piss people off, so blow him off quick.

mktsrmanipulated's picture


Under the law, the meaning of racketeering activity is set out at 18 U.S.C. § 1961. As currently amended it includes:

sounds like a good year at goldman

Peter Pan's picture

Like they say......we take off our hat to big crooks and we hang the little ones. How else does one explain the almost manic propensity to jail insignificant offendors in the USA and to let the big ones continue on happily?

lemarche's picture


EscapeKey's picture

$130k fucking lol

i was going to write a really sarcy low-ball estimate of damages to be paid as a "fine" but i see the hard-working people at the SEC beat me to it.


Zer0head's picture

the difference betwen this dude and the 'man in the mirror' is exactly what?



Temporalist's picture
Francois Hollande on defensive over tax fraud scandal

François Hollande was forced to deny offering any “protection” to his former tax fraud tsar amid claims he knew as early as December that Jérôme Cahuzac likely had an undeclared Swiss bank account.

"Le Canard now alleges, citing police and political sources, that Mr Hollande was informed by his interior minister in December that the voice on the tax fraud recording was “likely” that of Mr Cahuzac.

Edwy Plenel, head of Mediapart, the investigative website that broke the story in December, said Mr Hollande ‘has no excuse” for reacting so slowly to the scandal.

“(He) knew full well what everyone knew,” he said."




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Ban KKiller's picture

Is he the "right size" for prosecution? Only if he is not currently employed by the banks. 

q99x2's picture

Give Madoff a new bunky. Arrest Loyd Bankfeind.

dbTX's picture

An ex Goldman guy did something like that, tell me it's not so.