| NEW YORK
NEW YORK Dec 3 A former Goldman Sachs Group Inc
trader who pleaded guilty to fraudulently building an
unauthorized $8.3 billion futures trade should repay $118
million to his former employer to cover its losses and spend
about three years in prison, federal prosecutors said.
In a Monday night filing in the U.S. District Court in
Manhattan, prosecutors said Matthew Taylor deserves a 33- to
41-month prison term that reflects his "blatant abuse" of the
trust placed in him by Goldman, which once considered him a
"rising star," and to deter other "rogue traders."
Investigators said the Massachusetts Institute of Technology
graduate fabricated trades and lied to supervisors to conceal an
$8.3 billion bet on Standard & Poor's 500 e-mini futures
contracts, which bet on the direction of that index, over a
two-day period in December 2007.
"The defendant took these steps out of both greed and
hubris, to improve the bottom line of his bank account and to
rehabilitate his suffering professional reputation," U.S.
Attorney Preet Bharara said in the filing.
Prosecutors said Goldman discovered the scheme on Dec. 14,
2007, and spent about $118 million to unwind the position.
Although the defendant's plea agreement estimated a loss of
$1 million to $2.5 million, prosecutors said restitution could
be greater, and that Goldman deserves to have its request to
recover all it lost fulfilled.
"Here, Goldman Sachs is a victim," Bharara said. "Ordering
restitution to Goldman Sachs for the cost of unwinding the
defendant's position would make Goldman Sachs whole."
In a Nov. 22 court filing, lawyers for Taylor said the
married father of two, who turns 35 on New Year's Day and has no
prior criminal record, should spend no time in prison.
They said Taylor's conduct was the "plainly aberrant" act of
a then 28-year-old trader under "overwhelming" pressure at
Goldman to succeed, and that the risk of his committing similar
conduct again is nonexistent.
"However misguided, his intentions were never to harm
Goldman," Thomas Rotko, a partner at Clayman & Rosenberg, wrote,
referring to Taylor. "He makes no excuses for his conduct and
accepts full responsibility for his actions."
Taylor's capacity to make restitution to Goldman was not
immediately clear. He was previously civilly fined $500,000 by
the U.S. Commodity Futures Trading Commission over his trading.
Goldman paid a $1.5 million civil fine last December to settle
CFTC charges that it failed to appropriately supervise Taylor.
Rotko declined to comment on the government filing.
Bharara's office did not immediately respond to a request for
comment. A Goldman spokesman had no immediate comment.
The $8.3 billion position was double the size of a $4.1
billion trade that the U.S. Securities and Exchange Commission
highlighted in a report on the May 6, 2010 "flash crash," where
e-mini trades caused the Dow Jones industrial average to
plunge 700 points in just a few minutes.
The case is U.S. v. Taylor, U.S. District Court, Southern
District of New York, No. 13-cr-00251.