The neat result was that ex-Goldman trader Matthew Marshall Taylor was able to hide an $8.3 billion position in 2007, by manually entering fake trades. “As a result, on seven trading days in November and December 2007, Taylor circumvented Goldman’s risk management, compliance, and supervision systems,” said the CFTC.
In a lawsuit filed earlier in November, the CFTC has sought a $1, 30,000 penalty against Taylor, who was at the time a vice president at Goldman Sachs’s Capital Structure Franchise Trading desk and later joined Morgan Stanley.
Bart Chilton, a CFTC commissioner criticized the imposed fine as being too low and said, “I believe that the monetary penalty should be significantly higher in order to represent a sufficient punishment, as well as to denote a meaningful deterrent to future illegal activity.”
Though Goldman Sachs took a $118 million loss in trying to set things straight and in unwinding the position in e-mini S&P futures contracts, it said, “Taylor’s activity was flagged by our controls on December 14, with no impact to customer funds … Since these events, we have enhanced our controls. We’re pleased to have settled this matter.”