Former Goldman Sachs Group Inc. (GS) traderMatthew Taylor surrendered to the Federal Bureau of Investigation at about 8:30 a.m. this morning as part of a U.S. securities fraud investigation, a person familiar with the matter said.
Taylor is to appear in Manhattan federal court later today. He was accused Nov. 8 in a lawsuit by the U.S. Commodity Futures Trading Commission of concealing an $8.3 billion position in 2007 that caused New York-based Goldman Sachs to lose $118 million.
Morgan Stanley hired Taylor in March 2008 after Goldman Sachs fired him three months earlier. Goldman cited “alleged conduct related to inappropriately large proprietary futures positions in a firm trading account,” in a so-called U-5 form, according to a Financial Industry Regulatory Authority document.
New York-based Morgan Stanley (MS), which had employed Taylor before he joined Goldman Sachs in 2005, hired him after a subprime mortgage-related trading position resulted in a $9.4 billion writedown in December 2007.
Taylor, who handled client-related equity derivative trading at Morgan Stanley, left the firm in July, the company said last year. Taylor’s departure wasn’t related to the CFTC complaint, 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.
Goldman Sachs, which wasn’t identified in the CFTC lawsuit, said at the time that Taylor made the trades while employed at the firm.
The CFTC case is U.S. Commodity Futures Trading Commission v. Taylor, 12-cv-8170, U.S. District Court, Southern District of New York (Manhattan).